Supporting Digital Financial Services in Myanmar PDF

Supporting Digital
Financial Services in
Myanmar
ASSESSMENT OF THE POTENTIAL FOR DIGITAL
FINANCIAL SERVICES IN AGRICULTURE VALUE
CHAINS
DECEMBER 2015
DISCLAIMER
The views expressed in this publication do not necessarily reflect the views of the U.S.
Agency for International Development or the U.S. Government
Table of Contents
Table of Contents ....................................................................................................................... 1
List of Abbreviations and Acronyms ......................................................................................... 3
A.
Executive Summary ........................................................................................................... 4
B.
Background and Context.................................................................................................... 8
C.
Digital Financial Services Plus Readiness Framework ................................................... 12
D.
Access to and Reach of Mobile Infrastructure ................................................................. 13
E.
Adoption and Reach of Digital Finance Infrastructure .................................................... 16
F.
Role of Government and Regulation ............................................................................... 25
G.
Agriculture Sector Analysis and Value Chain Transaction Flows ................................. 28

Rice ...................................................................................................................................... 29
Sesame (Oil Seeds) .............................................................................................................. 31
Pulses (Green Gram) ............................................................................................................ 33
Aquaculture .......................................................................................................................... 36
H.
Agriculture sector challenges and financial services needs ............................................ 38
I.
Potential Applications of DFS ........................................................................................ 41
J.
Bibliography .................................................................................................................... 55
Annex 1
Assessment Objectives and Methodology ............................................................. 58
Annex 2
List of Stakeholders Consulted .............................................................................. 60
Annex 3
Summary of Rapid Value Chain Assessment ........................................................ 61
Annex 4
Locations of FGDs and KIIs .................................................................................. 63
Annex 5
Additional Details on Agriculture Sector in Myanmar ......................................... 64
Annex 6
Additional Details on the Rice Value Chain ......................................................... 68
Annex 7
Additional Details on Sesame Value Chain .......................................................... 72
Annex 8
Additional Details on the Pulses Value Chain....................................................... 77
Annex 9
Additional Details on the Aquaculture Value Chain ............................................. 82
Annex 10 Note on Value Chain Transaction Map Data ........................................................ 86
Supporting Digital Financial Services in Myanmar 1

Assessment of the potential for digital financial services in agriculture value chains
This report was prepared under the Mobile Solutions Technical Assistance and
Research (mSTAR) program. The mSTAR program is a strategic investment by
USAID to advance mobile solutions and close the gaps that hold back access and
uptake. mSTAR supports broad-based coordinated action by a range of market
stakeholders including governments, donors, mobile service providers and their
customers. mSTAR works closely with the USAID Digital Development team
and USAID Missions abroad to identify opportunities to leverage the power of
mobile technology to improve development outcomes. Activities are carried out
by FHI 360 and a group of highly qualified partner organizations.
The assessment was conducted by Enclude, in partnership with FHI 360 and the U.S. Agency
for International Development (USAID), under an initiative to Support the Development of
Digital Financial Services in Myanmar. The in-field focus group discussions and key
informant interviews were conducted by the Myanmar Marketing Research & Development
(MMRD) Co., Ltd. The authors of this report are Nicholas Evans, Ali Akram, and Tricia Cuna
Weaver. Contributors to and reviewers of this report include Josh Woodard, FHI360; Santhosh
Thiruthimana, Enclude; Kay McGowan, USAID; Brooke Patterson, USAID; Megan Willis,
USAID/Burma; and Daniel Swift, USAID/Burma.
Note on Exchange Rate and Interpreting Transaction Data

The local currency in Myanmar is the Myanmar Kyat (MMK). The United States Dollar
(USD) equivalent used throughout this study was calculated at rate of USD 1 = MMK
1115, unless otherwise noted in the report.

List of Abbreviations and Acronyms

ADB
ATM
CBM
Cenfri
CEXC
CGAP
DFS
FGD
G2P
GDP
GIZ
IFC
KII
LIFT
MADB
MAP
MFI
MKK
MNO
MPT
MPU
mSTAR
MT
OECD
P2P
POS
USAID
VC
Asian Development Bank

Automated Teller Machine
Central Bank of Myanmar
Centre for Financial Regulation and Inclusion
Commodity Exchanges
Consultative Group to Assist the Poor
Digital Financial Services
Focus Group Discussion
Government to Person
Gross Domestic Product
Deutsche Gesellschaft fr Internationale Zusammenarbeit German Society
for International Cooperation
International Finance Corporation
Key Informant Interview
Livelihoods and Food Security Trust Fund
Myanmar Agricultural Development Bank
Making Access to Financial Services Possible
Microfinance Institution
Myanmar Kyat (Currency of Myanmar)
Mobile Network Operator
Myanmar Post and Telecommunications
Myanmar Payments Union
Mobile Solutions Technical Assistance and Research
Metric Tons
Organisation for Economic Co-operation and Development
Person to Person
Point of Sale
U.S. Agency for International Development
Value Chain

A | Executive Summary
Growth and development of Myanmars agriculture sector is critical to the
structural transformation process that will support broader economic and social
development in the country. To accelerate this process, the Government of
Myanmar has committed to increasing agricultural production to improve food
security and reduce poverty, and to improving rural livelihoods by helping
communities harness their physical, natural, and human capital.
Digital financial services (DFS) defined as financial services delivered and accessed
through digital channels and instruments such as mobile phones, cards, point-of-sale (POS)
devices, and agent outlets can play a critical role in supporting achievement of the
Governments priority objectives by economically, securely, and transparently delivering
financial services that the agriculture sector requires to improve productivity and raise rural
incomes. As digital channels can drastically lower the cost and improve the speed at which
funds are transferred between individuals, businesses, and organizations, DFS presents an
opportunity to improve the efficiency and productivity of agricultural value chains. In turn,
adoption and expansion of digital payments products helps to pave the pathway to expand
access to credit, savings, and insurance in rural areas, allowing financial services providers to
leverage the digital payments infrastructure. As private sector players and donors invest in
initiatives to take advantage of untapped opportunities in Myanmars agriculture sector, DFS
can also complement and boost the impact of these initiatives by lowering operating costs
and improving the efficiency of working with rural, agricultural segments. Moreover, DFS
creates opportunities for new partnerships and business models to emerge, which focus on
tailored approaches for serving the agriculture sector and lower-income segments.
In this context, the purpose of this study is to assess the potential for DFS to contribute to
value chain efficiency and improved agricultural productivity, and to map the payment flows
in four select agriculture value chains: rice, sesame, pulses (green gram), and aquaculture.
The assessment findings shed light on the challenges faced by Myanmars agriculture sector
and its readiness for DFS. Based on these findings, the report includes recommendations on
ways in which DFS could contribute to greater agricultural productivity and rural
development, as well as areas for stakeholder involvement to further develop DFS in
Myanmar.
To frame the findings and recommendations of the assessment, the report adapts and applies
CGAPs DFS Plus readiness framework for Myanmars agriculture sector, which is
organized across six main dimensions, as follows:

1 | ACCESS TO AND REACH OF MOBILE INFRASTRUCTURE

After a prolonged period of underinvestment, mobile infrastructure in Myanmar has
experienced rapid developments since the licensing of two foreign mobile network operators
(MNOs), Telenor and Ooredoo, in 2013. Consistent with rising mobile penetration
throughout the country, the assessment revealed substantial rates of mobile phone ownership
among farmers and upper value chain actors. Although usage among farmers is mainly
limited to voice calls, upper value chain actors also reported using their phones for a widervariety of activities, such as to access the internet and send SMS. Coupled with the rapid
spread of mobile network coverage, these mobile adoption and usage trends suggest a
potentially strong foundation for mobile-enabled DFS.
2 | ADOPTION AND REACH OF DIGITAL FINANCE INFRASTRUCTURE
To date, six mobile money services initiatives have been piloted, launched, or are gearing-up
to launch in Myanmar. However, continued regulatory uncertainty (discussed in Section 3
below) has made it difficult for many of these services to move beyond the planning phase, as
key regulatory aspects are still under development. Nevertheless, providers are preparing to
take advantage of the market potential for DFS in Myanmar, and the opportunity that it
presents to address current limitations in the financial sector.
Although Myanmars financial sector is experiencing impressive reforms and development,
the country remains one of the worlds most under-banked countries. The provision of
financial services in rural areas is particularly low, with only 2.5 percent of loans going to the
rural sector, despite the fact the sector accounts for 30 percent of Myanmars gross domestic
product (GDP) and two-thirds of jobs.1 The main source of financing for Myanmars
agriculture sector is the Myanmar Agricultural Development Bank (MADB), though MADB
credit covers only approximately half of the cost of production and has repayment terms that
are not tailored to production cycles. Although other players including MFIs, cooperatives,
and input dealers are also increasingly serving rural segments, their footprint is still small. As
a result, there is a large unmet demand for affordable financial services that address the needs
of the agriculture sector.
DFS provides potential solutions to address cost and efficiency concerns in serving
agricultural segments, creating a stronger business case for providers and other stakeholders
to increase their operations in rural Myanmar. Six DFS initiatives have already launched or
are planning to launch in Myanmar. To expand competition and ensure sustainable
developments in the DFS sector, however, an enabling regulatory environment is critical, as
described below.
OECD, Multi-dimensional Review of Myanmar, 2015.

3 | ROLE OF GOVERNMENT AND REGULATION

The Central Bank of Myanmar (CBM) issued a Mobile Banking Directive in December 2013,
which established a bank-led model for the provision of mobile banking services. In early
2014, however, the CBM released a draft of the Dedicated E-money Issuer (DEMI) directive,
which permits non-bank actors to issue electronic money (e-money) and utilize agents to
conduct electronic transactions. Industry stakeholders are eagerly anticipating the release of
final version of the DEMI; if it does in fact enable non-bank players to offer DFS, market
dynamics would change significantly as the industry opens up to a wider range of institutions,
such as MNOs and third-parties.
Allowing non-bank actors to operate in the DFS space has the potential to spur competition,
encourage innovation, and in turn promote greater financial inclusion. Since financial
institutions have been unable to fully take advantage of the opportunity to develop digitalcentric models, allowing non-banks actors to enter the space could bring in the investments,
infrastructure, and capacity needed for the scale-up of DFS in the country. At the same time,
a robust regulatory environment for DFS strikes the right balance between promoting
innovation and ensuring the safety and efficiency of the financial sector. Key elements of
building an effective regulatory system for DFS therefore also includes instituting transaction
limits and know-your-customer (KYC) requirements proportionate to perceived risk;
promoting interoperability between providers; providing guidelines for emerging distribution
models, such as shared agent networks and agent aggregators; and ensuring a level playing
field by ensuring that dominant players do not exploit their position by blocking access to
agents and communication channels, such as USSD.
4 | AGRICULTURE SECTOR ANALYSIS AND VALUE CHAIN TRANSACTION
FLOWS
Agriculture is a key driver of Myanmars economy, accounting for 30 40 percent of the
countrys GDP and 66 percent of employment. The four value chains that are the focus of this
study - rice, sesame, pulses, and aquaculture capture the bulk of agricultural economic
activity in the country. For each value chain, the study mapped the transaction details
between each value chain actor, the volume and value of transactions, payment frequency,
number of actors receiving payments, number of transactions, average transaction size, and
payment methods. Cash is the predominant payment instrument across all four value chains,
within which nearly 5 million cash transactions are conducted between farmers, collectors of
produce, and millers / exporters per crop cycle, exceeding a value of USD 8 billion.

5 | AGRICULTURE SECTOR CHALLENGES AND FINANCIAL SERVICES NEEDS

Across the value chains, there were a number of overarching constraints identified, which
impede the sectors development and competitiveness. These challenges include insufficient
access to and application of inputs, which impacts yield and quality of produce; rising labor
shortages, which increases costs of production; limited access to equipment, which results in
reliance on labor and impedes mechanization; and lack of access to appropriately-structured
credit products, which contributes largely to the aforementioned constraints faced by farmers.
6 | POTENTIAL APPLICATIONS OF DFS
To help address these challenges, DFS can serve as an important tool to improve access to
credit, savings, insurance, and payments that enhance productivity and improve efficiency
along the value chains. A summary of recommendations on potential applications of DFS to
address agriculture sector challenges, as well as recommendations to promote DFS ecosystem
development, is included in the matrix below.
Agriculture Sector Challenges & Potential Applications of DFS
Areas to Support
DFS Development
Potential DFS Applications
Burma's Agriculture Sector

Challenges
Transfers & Payments
Savings
Credit
Insurance
Poor Infrastructure
Market Volatility
Lack of Input Financing
Adverse Weather
- Expensive for FIs to serve

rural areas
- Sustaining price/demand
fluctuations
- Fertilizer and seeds
- Weather fluctuations
- Insecticides and sprays
- Climate change
Limited Footprint of Formal

Financial Services
Strong Liquidity Pressures
Lack of Asset Financing
Natural Calamities
- Farmers sell produce at low

rates for immediate liquidity
- Antiquated farming methods
- Floods
- Labour shortages
- Cyclones
Lack of Liquidity
Infestations & Diseases
- Land preparation
- Pests
- Harvest
- Parasites
- Traveling to branches is
inconvenient and expensive
Efficient Delivery of Formal Financial Services Through Agents and Digital Accounts
e.g. Remote and proximity
e.g. Account opening, deposits,
e.g. Disbursements and
e.g. Premium pay-outs for
payments for inputs, receiving
and withdrawals for
collections of Micro-Loans
micro-insurance
payment from sale of produce, microsavings
etc.
Facilitate Product and Model Innovations
Input financing through savingslinked wallets
Expansion and development of

tailored agri financing
products, e.g credit from
banks, MFIs, savings and
credit cooperatives; input
financing; and equipment
leasing
e.g. Weather index-based

insurance products
Promote Development of a Robust DFS Ecosystem

- Create an enabling regulatory environment - Develop a strong agent network - Strengthen MFIs and NGOs
Develop Customer-Centric Products
- Segmentation
- Human Centered Design

Mechanisms to assess farmer
credit worthiness
Development of indexes and

monitoring techniques

B | Background and Context

Geographically positioned next to 40 percent of the worlds population, wellendowed with natural resources, and currently experiencing liberalizing
economic reforms, Myanmar is well-positioned to seize economic progress as it
opens up to the world. After years of isolation, however, the country is
characterized by high levels of poverty, ranking 150 out of 187 countries in the
2014 UNDP Human Development Index. Additionally, there are substantial
disparities in living conditions between rural and urban areas, as 36 percent of the
rural population lives below the poverty line (compared with the national poverty
rate of 26 percent).2 Financial inclusion is also low, with only 23 percent of adults
with an account from a financial institution, compared with 69 percent in the East
Asia and Pacific region.3
Recognizing the need to overcome these challenges
to realize the countrys economic potential, the
Government of Myanmar has established a number
of national development plans, including the Poverty
Alleviation and Rural Development Action Plan
(PARDAP). Two of the priority outcomes from these
national development plans are to increase
agricultural production to improve food security and
reduce poverty, and to improve rural livelihoods by
helping communities harness their physical, natural,
and human capital.
Access to financial services is integral to rural
development and overall economic growth, directly
impacting gross domestic product (GDP) and
Figure 1: Map of Myanmar (source: IFAD)
productivity through more efficient allocation of
resources. Myanmars rural economy, which is driven primarily by the agriculture sector,
suffers from a severe lack of access to appropriately tailored, formal financial products and
services that can increase agricultural production. Financial sector actors in Myanmar,
constrained by their traditional brick and mortar branches and lack of new banking
technologies, still operate predominantly in cash. This approach has restricted the expansion
of services to new clients by banks and MFIs, adversely affecting agriculture-dependent
households and businesses.
Digital financial services (DFS) defined as financial services delivered and accessed
2
3
ADB Sector Assessment (Summary): Agriculture, Natural Resources, And Rural Development
2014 Financial Inclusion Data / Global Findex, World Bank

through digital channels and instruments such as mobile phones, cards, point-of-sale (POS)
devices, and agent outlets can play a critical role in supporting achievement of the
Governments priority objectives by economically, securely, and transparently delivering the
financial services that the agriculture sector requires to improve productivity and raise rural
incomes. As digital channels and products can drastically lower the cost for financial
institutions to deliver financial services and for customers to access them, DFS provides a
key opportunity to expand access to credit, savings, insurance, and payments products in
rural areas. As private sector players and donors, such as those contributing to the
Livelihoods and Food Security Trust Fund (LIFT), invest in initiatives to take advantage of
untapped opportunities in Myanmars agriculture sector, DFS can also complement and boost
the impact of these initiatives by lowering operating costs and improving the efficiency of
working with rural, agricultural segments. Moreover, DFS creates opportunities for new
partnerships and business models to emerge, which focus on tailored approaches for serving
the agriculture sector and lower-income segments.
In this context, the purpose of this study is to assess the potential for DFS to contribute to
value chain efficiency and improved agricultural productivity. Specifically, the main
objectives of this assessment are to advance the understanding of:
Payment flows and payment service providers in agriculture value chains

Potential for DFS to enhance the efficiency of transactions within the value chains,
thereby contributing to improved livelihoods
Value chain actors familiarity with and openness to DFS, particularly mobile-based
payment options
The assessment was conducted through an initial desk study, stakeholder interviews, focus
group discussions (FGDs) with farmers, and key informant interviews (KIIs) with upper
value chain actors. It focused on four value chains, which were selected based on their
relevance to the economic activity within Myanmars agriculture sector and the degree to
which the value chains have well-defined and accepted structures (see Annex 1 for more
details on the assessment methodology; Annex 3 for a summary of the rapid value chain
assessment, leading to the final selection of the value chains; and Annex 4 for a map of FGD
and KII locations). The selected value chains and the geographic areas of study include:
Rice: Delta (Ayeyarwady Region)

Sesame (oil seeds): Dry Zone (Magway and Sagaing Regions)
Green gram (pulses): Dry Zone (Magway and Sagaing Regions) and Yangon Region
Aquaculture: Delta (Ayeyarwady Region)

Through an evaluation of the potential role of

DFS in supporting the development of these
four value chains, the findings and
recommendations of this study point to the
importance of promoting financial inclusion
not simply as an end, but as a means to
support the achievement of key development
goals, such as those that the PARDAP aims to
achieve (see Figure 2). For instance, as
technology facilitates the creation of new,
low-cost delivery models, DFS can enable
financial institutions (FIs) to expand their
operating footprint, reduce costs for cash
distribution and collection, collect financial
Figure 2: Pillars of the PARDAP
and non-financial data for targeted product
design and credit decision making, and scale-up the provision of financial services to millions
of new clients in the agriculture sector. In turn, improving access to finance for Myanmars
rural and agricultural segments would enhance the resilience of value chain actors by
providing credit for inputs and equipment, enabling them to save and better manage
expenses, and offering means to manage financial and environment shocks.
It is worth noting a few limitations associated with this assessment. The team that led this
assessment was not based in Myanmar, and therefore all information is based on the findings
from desk research, two short trips, and follow up with stakeholders in country via email.
More specifically, there was the upfront challenge of obtaining a comprehensive
understanding of the value chain maps for the four selected value chains. This is due to the
fact that information on the value chain structures is unavailable or unreliable.
During the desk research, the team found substantial information gaps regarding the structure
of value chains in Myanmar (sufficient information was obtained only for the rice value chain
prior to the first trip by the team to Myanmar). In comparison with other countries, such as
Indonesia, value chains have not been mapped to the same extent in Myanmar.
Understanding the structure of value chains was a critical component of this assignment,
since it is needed in order to assess the transaction flows and potential for digitizing those
flows. To address this challenge, the team focused heavily on filling-in information gaps
during the stakeholder interviews. The team was able to obtain access to additional research,
much of which had not yet been published, which helped to fill knowledge gaps on all the
pulses and oil seeds. Although some information was obtained on the aquaculture and
horticulture sectors, the level of detail was not the same as the information received on other
value chains.

That being said, the following sections of this report elaborate on the assessment findings,
which shed light on the challenges faced by Myanmars agriculture sector and the readiness
of the sector for DFS. Based on these findings, the report also includes recommendations on
ways in which DFS could contribute to greater agricultural productivity and rural
development, as well as areas for stakeholder investment and support to further develop DFS
in the country.

C | Digital Financial Services Plus Readiness Framework

To frame the findings and recommendations of the assessment, the report adapts and applies
CGAPs DFS Plus readiness framework for Myanmars agriculture sector, as illustrated in
Figure 3.4
Figure 3: Digital Financial Services + Readiness Framework for Myanmar's agriculture sector
In applying the framework, the report considers six dimensions to identify the challenges
faced by the agriculture sector, including:
Enabling Environment
Agriculture Sector-Level Analysis
1. Access to and reach of mobile infrastructure,

4. Agriculture sector analysis and transaction flows,
including levels of coverage, adoption, and usage including an assessment of the four value chains
and a mapping of transaction flows
2. Adoption and reach of DFS infrastructure,
5. Agriculture sector challenges and financial
including the state of financial sector
services needs, with a particular focus on the
development, current access to financial services, challenges and needs in the four select value
and value chain actors perceptions of DFS
chains
3. Role of government and regulations, including an 6.
assessment of the DFS regulatory environment
and the importance of regulations in enabling
DFS to contribute to development goals
Potential applications of DFS, including

recommendations in which DFS can be applied
to address agriculture sector challenges and areas
for support to promote DFS development
CGAP and McKinsey, CGAP Digital Finance + Readiness Framework and Assessment for Tanzania, May 2015.

D | Access to and Reach of Mobile Infrastructure

Until June 2013, the state-owned operator, Myanmar Posts
and Telecommunications (MPT), had a monopoly on the
countrys telecommunications industry. Network coverage
was limited to Yangon and a few other cities, leaving rural
areas largely without access to mobile infrastructure.
However, mobile penetration rates have increased rapidly
with the licensing of Telenor and Ooredoo in 2013,
providing a positive outlook for the deployment of DFS to
reach rural segments. Key figures on Myanmars mobile
infrastructure are highlighted below.
USD
1.50
Price of SIM
cards,
reduced from
USD 200 prior
to 2013
32M
No. of
subscribers as of
October 2015:*
MPT: 16M
Telenor: 11.8M
Ooredoo 5.2M
60%
Mobile
penetration
rate**
84%
Telenor and
Ooredoos
commitments
for voice and
data coverage
by 2019***
* Myanmar Times (online), November 9, 2015 ; Telecompaper (online), October 28, 2015 ; Myanmar Times
(online), October 14, 2015
** The Nation (Nation Multimedia), October 12, 2015
*** GSMA, Closing the Coverage Gap A View from Asia, June 2015
MOBILE PHONE ACCESS AND USAGE - FARMERS

The findings of the assessment reflect the increasing mobile
penetration rates in rural Myanmar. In the FGDs conducted
with farmers, 87 percent of respondents reported owning a
mobile phone (51 percent had smartphones and over one-third
used feature phones) (Figure 6). Disaggregated by gender,
phone ownership between men and women was generally
comparable. However, of those farmers who owned phones,
there was a slightly greater proportion of men who owned
Every farmer has a phone
smartphones than women; 52 percent of the total number of
now. Some traders hold two
men with phones had smartphones versus 35 percent with
mobile phones. Small Rice
feature phones, compared with 44 percent and 41 percent,
Farmer in the Delt
respectively, for women (Figure 6). As expected, there were
also disparities in phone ownership patterns between age generations; 80 percent of farmers
between 18 and 27 years of age reporting having smartphones, compared with 47 percent of
farmers between 48 and 57 years of age.
Figure 4: Type of phone owned by FGD respondents and Type of Phone Owned by Gender (As a % of Total Gender Phone Ownership)
With respect to usage, farmers mainly use their phones

for voice calls, reporting low levels of data use.
Additionally, only one-third of farmers reported using
their phones for SMS for communications (Figure 5).
Although the rate of mobile phone penetration among
respondents was high, the fact that usage among
farmers is limited mainly to voice calls reflects the way
in which farmers prefer to interact with their
technology, and is an insight to consider in the design
of DFS interfaces. For instance, DFS providers may
consider the integration of functionalities such as
interactive voice response (IVR) to mirror farmers
preferred interaction.
Figure 5: SMS Usage of FGD Respondents
MOBILE PHONE ACCESS AND USAGE UPPER VALUE CHAIN ACTORS

Among the upper value chain players, 92 percent of the KII respondents had mobile phones.
The study reflected the growing transition to smartphones among upper value chain actors,
with 25 percent of respondents reporting ownership of a basic feature phone, 42 percent with
a smart phone (as their sole phone), and 25 percent with both a smartphone and feature
phone. In all, 67 percent of upper value chain actors own smartphones. Additionally, in
contrast with farmers who mainly used phones for calls, KII respondents used phones for a
wider variety of purposes, including accessing the internet (Figure 6). Coupled with the rapid
spread of mobile network coverage, these mobile phone adoption and usage rates indicate a
strong potential for mobile-based DFS.

Figure 6: Uses of mobile phone by KII respondents
What do you use your mobile phone for?

60
50
40
30
20
10
0
100%
80%
60%
40%
20%
0%
Calculation
Rice
To play
games
To get news
of different
things
Aquaculture
Listen to
Music
Sesame
To check
airtime
balance
SMS
Pulses
To take
pictures
To access Making &

the internet receiving
calls
No. of Responses
% of Total

E | Adoption and Reach of Digital Finance Infrastructure

As summarized in Table 1, a number of providers have piloted,
launched, or are gearing-up to launch mobile money services in
Myanmar. However, continued regulatory uncertainty (discussed
in Section F below) has made it difficult for many of these
services to move beyond the planning phase, as key regulatory
aspects are still under development. Beyond those initiatives
listed in the table, other interested parties looking to play a role in
Myanmars DFS space include Boloro, Myanma Computer
Company (MCC), Yatanarpon eBilling Services, Red Dot, and
Easy Pay Company.
Table 1: Launched and Planned DFS Initiatives

Service
Launch
Partners
Myanmar Mobile
Money
Launched
Innwa Bank, Oberthur Technologies &

Mobilemate Telecommunications
MyKyat
Launched
Frontier Payment Technologies, First

Private Bank
MYWALLET plus
Launched
CB Bank, Leo Tech, MCC Group
Wave Money
Launched
Telenor & Yoma Bank
Ooredoo
Planned
Ooredoo
Myanmar Payment
Blue Ocean Operating Management,
Solution Services
Planned
Myanmar Technologies and Investment
(MPSS)
Corporation, Myanmar Citizen Bank
In their strategies to roll-out DFS, many of these providers have indicated plans to develop
services specifically for the agriculture sector. For example, MyKyat and Myanmar Mobile
Money are seeking to collaborate with existing players, such as fertilizer distributors, to expand
their DFS agent network in rural areas. Some distributors, notably Awba, aim to establish their
own proprietary payment platforms. Ooredoo and Frog Design, with support from the GSMA,
are developing mAgri services through a user-centric design approach. Ooredoo and Telenor
also have plans to offer bulk payments services, including loan disbursements and collections
for MFIs and cooperatives. However, the immediate priority of providers is the roll-out of DFS
services in urban areas, with gradual expansion into rural areas as the GSM footprint increases.

Supporting card-based digital payments in Myanmar, the main actors in the space include:
The Myanmar Payment Union was launched in 2011 and consists of 21 member banks.
The national payment network provides interoperability of all member banks ATMs.
There are over 1,000 ATMs in Myanmar, mainly concentrated in urban areas and town
centers in Yangon and Mandalay Region. However, adoption is slow, with only 1
million cardholders as of June 2015.
Visa opened an office in Myanmar in 2015 and is working closely with permitted banks
to introduce credit card products into the Myanmar market. On the acceptance side,
Visa is accepted at more than 1,800 POS terminals across the country, mainly targeting
hotels, restaurants, and shops serving tourists. Currently, there are 20,000 Visa
cardholders in Myanmar, and Visa is working closely with banks to increase this
number in the coming years.5
Red Dot, an electronic point-of-sale (ePOS) provider, has established a cash acceptance
network that can be accessed through ePOS terminals or through a mobile app. Red Dot
agents open a merchant account, which can be used to distribute airtime top-up and
eventually, accept utility bill payments via an aggregator. As of February 2015, Red
Dot had 1700 retailers, with 1300 in Yangon, 300 in Mandalay, and 100 in Nay Pyi
Taw. Red Dot plans to expand the network exponentially by end of 2016 and to partner
with other DFS providers to offer more services.
FINANCIAL SECTOR UNDERDEVELOPMENT AND THE POTENTIAL FOR DFS

TO BRIDGE THE GAP
With these various initiatives launched or under
development, providers are preparing to take advantage of
the market potential for DFS in Myanmar and the
opportunity that it presents to address current limitations in
the financial sector. Although its financial sector has
developed substantially over the past several years, Myanmar
remains one of the worlds most under-banked countries;
fewer than 5 percent of adults have savings accounts with a
formal financial institution, only 30 percent of adults claimed
to have access to any kind of financial service from a regulated financial service provider,
and approximately 15 percent of the adult population (5.9 million adults) borrow from
unregulated moneylenders.6 These figures underscore the need for additional investments to
promote financial inclusion to enable growth of the economy, particularly in the agriculture
sector.
Only 2.5% of loans in
Myanmar go to the rural sector
despite the fact the sector
accounts for 30% of gross
domestic product (GDP) and
two-thirds of jobs. - OECD's
Multi-dimensional Review of
Burma, Jan. 2015
http://www.myanmarinternationaltv.com/news/u-20-visa-card-bank-launches-commemorative-travel-card
Making Access Possible (MAP) report by UNCDF, FinMark Trust and, Cenfri

The provision of financial services in rural areas is low due to a number of factors including
interest rate limits (which restrict financial institutions profitability in working with lowerincome segments),7 collateral requirements, and the lack of tailored products and services that
meet the needs of rural populations. The limited formal financing that is available in rural areas
is provided primarily by the Myanmar Agricultural Development Bank (MADB), which
reaches 1.85 million households (see textbox below).
MYANMAR AGRICULTURAL DEVELOPMENT BANK (MADB)
Rice accounts for 88 percent of the portfolio of the MADB, which offers credit of MMK
100,000 per acre (USD 89.69)
MADB does lend to other value chains, but at much lower levels, which has led to a large
proportion of the costs of production being met through alternative financing sources, namely
advances against crop sales and down payment on goods
MADB only lends to farmers and does not serve other value chain actors such as traders,
exporters, transport firms, warehouses, or equipment dealers.
MADBs credit product is limited to 10 acres and covers only approximately 50 percent of the
cost of production, though it is priced at subsidized interest rates (0.4 percent per month)
Since MADB credit covers only half of the cost of production, it is largely used as a social
safety net to ensure rice production for food security and stability purposes and farmers turn
to a number of additional sources of credit to fund activities
As the sector develops, however, formal channels for agricultural financing are expanding.
With the passing of the Microfinance Law in 2011, an increasing number of microfinance
institutions (MFIs) and NGOs are entering the market. PACT Global Microfinance Fund is
currently leading the microfinance sector, with approximately 590,000 active borrowers. 8
Proximity Design and World Vision are other microfinance providers active in the agriculture
sector. The Global Treasure Bank (formerly Myanmar Livestock and Fishery Development
Bank) and the Central Cooperative Society also provide assistance to small numbers of farmers
in their respective areas of focus. With respect to loans issued by the Cooperative Society, the
Ministry of Cooperatives has recently increased the maximum loan amount to each farmer from
MMK 111,500 (USD 100) to MMK 557,500 (USD 500), enabling the cost of production to be
met more effectively. Moreover, input dealers offer structured products; Awba, a major
agricultural inputs importer and distributor, established a microfinance arm in 2012 to provide
credit to the sector.
For banks, the minimum interest rate for deposits is 8 percent per annum and the interest rate for loans is
capped at 13 percent per year; for MFIs, these figures are 15 percent and 30 percent per annum, respectively.
8 Stakeholder Interviews with PACT Global Microfinance Fund

Despite these developments, however, there is still a large unmet demand for financial services,
which the study confirmed. Despite the dominance of the MADB in the market, the assessment
also revealed gaps in MADB services, representing opportunities for financial services
providers to take advantage of these market opportunities. Specific gaps include:
Limited availability of affordable credit: Loans

provided by MADB cover only a fraction of the
farmers total financing needs; the credit gap estimate
of small-scale rice farmers calculates that 49 percent
of their production costs are not met by MADB
loans.9 MADB also does not finance larger farmers
or other value chain actors, such as traders, exporters,
transport firms, warehouses, or equipment dealers.
As a consequence, many agriculture sector players turn
to expensive, informal financing, are forced to
compromise on the quantity or quality of inputs, have
limited ability to shift to time- and labor-saving
mechanization, and are unable to invest in growing
their businesses. Based on analysis conducted during
the assessment, if millers in the rice value chain are
able to invest adequately in infrastructure, productivity
could increase by as much as 25 percent.10
Myanmar Agricultural
Development Bank does not
give loans in the time of
plantation. In this period,
money is borrowed from
outside. Large Green Gram
Farmer in the Dry Zone
Broken rice
Poor structure of credit products: Formal credit products offered by MADB are also
poorly structured and are not tailored to crop cycles. Loans are typically due
immediately after harvest, thus pressuring farmers to sell their crops quickly in order to
repay loans. As produce floods the market, farmers must accept lower prices and
therefore, lower incomes. In the case of rice, the pressure to sell quickly leads to paddy
that is rushed to market without being adequately dried, resulting in large amounts of
broken rice that receives a much lower price. Farmers growing pulses and rice in the
dry season also noted that MADB loans are only available once they are finished
planting. These farmers therefore face serious money shortages in the months before
planting in October, when expenditures must be made
Sometimes, I have to
for labor and inputs (Figure 7). In some cases, farmers postpone repaying my debt to
finance production through informal sources, and use my creditor by explaining to
MADB loans to repay informal creditors. Loans from them to take their money
PACT Global Microfinance Fund, Proximity Design, back only when I get a loan
and World Vision do offer farmers some flexibility, but from the Agricultural Bank.
Small Rice Farmer in Delta
their availability is limited.
Enclude analysis
Enclude analysis
10

Figure 7: Depiction of cash shortage for dry season rice farmers
Ma
y
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Dry Season Paddy Lower Myanmar

(17%)
Sowing
Cash Shortage
Growing
Harvesting
Informal actors partially fill the financing gaps in rural What I dislike most is the
areas, as traders, brokers, moneylenders, pawnshops, long waiting time. Although
friends, and family provide credit to farmers. These we have [an appointment] at
informal mechanisms have been built and refined over 9am, the staff arrive at 10am.
generations and are adapted to Myanmars rural Sometimes we miss lunch. If
dynamics. Interviewed farmers noted that loans from we have money, we can eat
out. If we dont have money,
informal sources are available against minimal
no lunch for that day.
collateral. Terms are flexible, as interest rates, tenure, Small Rice Farmer in Delta,
and payment instrument (cash versus in-kind) are on likes and dislikes when
negotiable. There is also little paperwork, traveling, dealing with banks
and waiting involved. This flexibility comes at a high
cost, however. For example, loans from moneylenders cost between 6 and 20 percent
per month. At these rates, farmers limit the amounts borrowed to meet their bare
necessities, which compromises the quality and quantity of inputs.
Limited access points for deposits and digital payments: As the financial sector
infrastructure is underdeveloped, there is a dearth of access points for financial services,
including savings and digital payments. As of 2013, Myanmar had 2.6 commercial bank
branches and 0.6 ATMs per 100,000 adults, compared with an average of 6.5
commercial bank branches and 22.6 ATMs per 100,000 adults in other developing East
Asia and Pacific countries.11 As a result of this limited infrastructure, rural populations
face higher costs for transportation and time spent traveling to deposit and transfer
funds. A number of respondents in the assessment reported the closest bank branch to
be over 20 miles away, with traveling distances of up to three hours by motorbike.
In light of these gaps, DFS provides potential solutions to address cost and efficiency concerns
in serving agricultural segments, creating a stronger business case for providers and other
stakeholders to increase their footprint in rural Myanmar and increase customers access to
affordable and timely services. In Kenya, for example, the microfinance institution (MFI)
Juhudi Kilimo utilized M-Pesa, a mobile money service, for loan disbursements and
repayments. In doing so, Juhudi Kilimo and its clients experienced a 56 percent reduction in
11
World Bank, World DataBank

Apr
net costs for disbursement and repayment. Additionally, the number of days for loan
disbursement decreased from seven days to two days, and back-office processing time reduced
from five days to five minutes.12
As demonstrated by this example, the use of digital channels would allow financial services
providers to improve their operating efficiency and thereby enhance profitability, even within
the constraints of interest rate caps currently in place in Myanmar. Additionally, they would be
able to increase revenue potential through the development of new business models, products,
and services that are specifically tailored to the needs of this market, which can enable a
significant scale-up in their customer base. For example, PACT Global Microfinance Fund
noted that they had 40,000 applicants waiting for loans (as of January 2015). Digitizing
operations would help to significantly decrease time spent on loan processing and disbursement,
allowing staff to focus attention on identification of new clients. Recommendations of more
specific areas in which DFS can support agricultural development are included in Section I.
VALUE CHAIN ACTORS USAGE AND PERCEPTIONS OF DFS
As providers prepare to launch their services, it is critical to have a strong understanding of
value chain actors current behaviors and perceptions with respect to DFS. Insights from the
assessment are described below.
Reliance on cash and lack of security concerns: In the four
This is not Yangon, there is no
value chains studied, the majority of transactions between theft.[My] only my worry is
actors are conducted in cash (see Section G for detailed the boat may capsize. Large
transaction flow maps). Nearly 90 percent of transactions Rice Farmer in Delta
made by the upper value chain actors are in cash, while all
farmer-level transactions are cash-based, including payment in-flows (from brokers, millers)
and out-flows (labor, inputs). Additionally, all of the interviewed upper value chain actors paid
their labor and staff in cash, citing that their staffs preference for cash payments.
Although the heavy reliance on cash is not unexpected, providers and stakeholders should
understand the core needs of rural segments and clearly articulate the value proposition of
shifting from cash to digital. For instance, although improved security is often a value
proposition for end-users in other markets, most farmers said they have no concerns of theft,
noting that it was the least of their worries. As Myanmar develops, incidence of crime may
rise; during a stakeholder interview with PACT Global Microfinance Fund, for example, it was
noted that security issues were previously not a problem, but such incidents have recently
increased. Nevertheless, security does not currently present a compelling value proposition for
end-users to encourage uptake of DFS. On the other hand, credit is an immediate constraint for
many value chain actors. Offering credit through agents and mobile wallets may therefore
12
http://betterthancash.org/wp-content/uploads/2012/09/USAID-Presents-Kenya-Case-Studies-in-e-Payment.pdf

encourage trial and adoption of DFS products.

Lack of security concerns cast doubt on the perceived value
of DFS and customers willingness to pay for such
services. Demand and customer value ambiguities make it
difficult to identify an anchor product for Myanmars rural
population, which in turn creates challenges for building a
DFS business case and efficiently allocating resources,
which necessitates further in-depth research into customer
and market dynamics.
I live in Pathein town in

Ayeyarwaddy division. I sold my
paddy to the trader in Yangon.
He did not pay me through [a]
bank. Instead, he asked me to
take money to one shopkeeper in
PatheinSo, I just [went] to the
referred shopkeeperand took
my money. This is called [the]
Hundi system. We used this
Hundi system because we [get]
money as soon as traders receive
all our paddy.
Urban Wholesaler in Delta
Use of informal money transfer services: Value chain

actors also reported substantial usage of informal methods
(Hundi and courier) for money transfer. Although a
number of interviewed traders and farmers reported that
they used banks for inter-city money transfers (for farmers, these were over-the-counter
services and used mainly for receiving), informal methods remain the primary channels.
Reasons cited included the speed with which money could be received from nearby
shopkeepers and other agents. Given the degree to which these informal systems are established
and trusted, providers should consider how to build on existing infrastructure to deliver their
services. For example, numerous merchants, retailers, wholesalers, and distributors that
constitute Myanmars rural landscape have the potential of becoming cash-in, cash-out agents.
Distributors and wholesalers (such as fertilizer dealers) can play a vital role in ensuring
liquidity of village-level agents, and Hundi agents can be recruited into a formal role, benefiting
the service through their established network.
Low awareness and perceived relevance of ATMs:
The strong point is that we dont
Regarding card-based payments, the assessment found that
need to go to the bank. It will be
usage was nearly non-existent in the agricultural sector.
adequate if the service charge is
None of the farmers reported having a bank card and
the same as the bank service
nearly 30 percent of upper value chain actors did not know
charge. Fish farmer in the
where the nearest ATM was located. The field assessment
Delta, on interest in mobile money
also revealed a general distrust of ATMs (see text box).
These negative perceptions should be explored further, as they could potentially deter adoption
of other technology-enabled channels.
High degree of openness to DFS among farmers: The
assessment also found that more than 70 percent of
farmers would be interested in using a mobile phone to
conduct financial transactions. Many farmers noted that
they would be compelled to use DFS if they are taught
how to use the service and if they can benefit from cost savings (such as transportation costs)
and convenience. In response, DFS providers should carefully consider the design and delivery
We are interested in it. We will
be fine [to use mobile financial
services] if we are taught.
Sesame farmer in the Dry Zone,
on interest in mobile money

of customer awareness and

training programs to ensure that
farmers understand and are
comfortable with using new
technologies, which would serve
to raise market interest and uptake
of their services. The majority of
farmers also noted that associated fees should be lower than what is charged by banks for
transfers. This is not unexpected, since farmers have not directly used DFS products and are
therefore unable to assess the value of such services except in comparison to other, seemingly
similar services. Figure 8 includes a summary of the features of a DFS service that would be
appealing to farmers, as well as the main concerns with DFS, which were most commonly cited
by FGD respondents.
Negative perceptions of ATMs:
A view heard on multiple
occasions was that ATMs were
usually out-of-service and that
such technologies cannot work
in Myanmars rural areas.
Figure 8: Perceived Benefits of and Concerns with DFS (Cited by Farmers)
Features that would appeal to farmers
Main concerns with DFS

Complexity of technology
Ease of use
Training on how to use the service
Low transaction fees
Interest on deposit
24-hour customer support
Widespread acceptability and trust of
services
Convenience, availability in village
Fear of losing money if a mistake is

made
Accessibility and security of money
No evidence of deposit / transaction
Phone is required
Weak mobile connectivity in rural areas
Utility farmers do not save much and
are used to transacting in cash
High degree of openness to DFS among upper value Business will develop because
chain actors: Upper value chain actors also indicated transaction is convenient. We
substantial interest in using a mobile phone for financial dont need to waste time to go to
transactions, especially for payments between various banks. Rural Sesame Trader in
value chain actors. In the KIIs, 70 percent of respondents the Dry Zone, on interest in mobile
said they would be very interested in learning more about money
mobile money services and using them in the future, and
an additional 19 percent noted moderate interest. These upper value chain actors (notably
millers and traders) are key transaction hubs that provide critical market access to farmers.
Therefore, they represent an important target market to drive uptake of DFS, both as potential
high-volume users of the services and as valuable advocates who can promote the services
among farmers and other trading partners.
Opportunities for DFS Plus: Infrastructure is a major challenge in Myanmar. Poor roads and
access to electricity increase the cost of inputs and transportation of outputs for value chain
House in rural Myanmar

equipped with solar panels
actors, which in turn limits options for mechanizing parts of the

value chain and constrains access to market options. In response
to these infrastructure gaps, an increasing number of people in
rural areas are investing in generators and solar panels. This
represents a market opportunity to provide financing through
DFS channels for off-grid solutions, such as solar panels, on a
pay-as-you-go basis.

F | Role of Government and Regulation

In December 2013, the Central Bank of Myanmar (CBM)
issued a Mobile Banking Directive (Directive 4-2013) to
leverage technology-enabled channels to promote greater
access to finance. The directive sets forth a bank-led model,
permitting only banks and financial institutions to offer mobile
banking services. Providers are authorized to offer the
following services:
Remittances (domestic and international)

Cash-in and cash-out
Payments made by individuals to a business (such as bill payments and payments for
goods and services)
Payments made by government to individuals (such as salaries and pensions)
Payments made by individuals to the government (such as taxes)
Payments and transfers between individuals
Microfinance, overdraft, and other financial services payments (such as insurance
premiums)
Only banks and financial institutions are currently allowed to offer mobile banking services,
and where the use of agents for last-mile delivery of financial services is permitted, the
directives do not mandate interoperability. The CBM has set stringent monthly reporting
requirements for person-to-person (P2P) transfers that include reporting Income Source of
Payer, Relation to Payee, and Reason of Payment for each transaction. Blanket limits
prescribed for P2P transactions are as follows:
Person-to-Person (P2P) Transaction Limits
Amount Per Transaction
MMK 500,000 (USD 388)
Amount Per Day
MMK 1,000,000 (USD 776)
Transactions Per Day
Although the Mobile Banking Directive has been beneficial for testing the waters and creating
excitement in the industry, it has not spurred the level of activity that the CBM would have
liked to see after nearly two years since its release. The Directive was quite short, leaving many
questions unanswered. Coupled with industry stakeholders expectation of more robust
regulations, the Directive created significant uncertainty that discouraged potential providers.
In early 2014, the CBM started consultations with various stakeholders such as CGAP and the
World Bank on a Dedicated E-money Issuer (DEMI) directive. In contrast with the Mobile
Banking Directive, the new directive may permit non-bank actors to be licensed to issue
electronic money (e-money) and utilize agents to conduct electronic transactions. If the final
version of the DEMI does in fact enable non-bank players to offer DFS, market dynamics
would change significantly as the industry opens up to a wider range of institutions, such as
mobile network operators (MNOs) and third-parties.
In July 2015, the CBM circulated another set of draft regulations for Mobile Financial
Services13 that aim to create an enabling regulatory environment for efficient and safe mobile
financial services in Myanmar. These drafts regulations allow non-bank entities to become
Mobile Financial Services Providers (MFSPs) and offer financial services through agents,
including MNOs and third-party players. The draft regulations forbid agent exclusivity and
mandate various levels of interoperability with other MFSPs, including agent, customer, and
mobile platform interoperability. The regulations also feature tiered KYC requirements, with
the opening of entry level accounts (Level 1 accounts) permitted without the presentation of an
ID card, though the final details of the regulations are yet to be confirmed.
Allowing non-bank actors to compete in the DFS space has the potential to spur competition
in the market, encourage innovation, and in turn promote greater financial inclusion. Financial
institutions in Myanmar have been unable to take full advantage of the opportunity to develop
digital-centric models due to limited internal capacity, lack of automated processes, and the
need to deploy secure IT systems (core banking systems, middleware, and gateways). In light
of these realities, creating a more enabling regulatory environment that opens up the digital
financial services market to non-banks actors could inject the investments, infrastructure, and
capacity needed for the scale-up of DFS services in Myanmar.
Policymakers in an increasing number of countries where expansion of DFS services have
struggled to take-off have revised their regulations to permit a broader range of providers. Such
regulatory amendments are now spurring the launch of innovative mobile money models in
countries such as Ghana, India, Indonesia, and Liberia, where non-bank actors are allowed to
play a role and are encouraged to invest in the development DFS services. For example, when
the Reserve Bank of India allowed MNOs and third-party financial service providers to apply
for payment bank licenses, 41 entities applied. Of the 11 granted licenses, three are major
telecommunications providers and others are payments companies willing to invest heavily in
the development of the industry. Additionally, the success of M-Shwari, a bank savings and
loan product offered through a partnership between the Commercial Bank of Africa and the
MNO Safaricom in Kenya, demonstrates how mobile money infrastructure (namely,
Safaricoms M-Pesa infrastructure) can serve as the rails on which traditional banking products
can be offered at scale.
At the same time, however, a robust regulatory environment for DFS is one that strikes the
right balance between the need for competition and innovation, with the need to ensure safety,
13
Mobile Financial Services is defined as the provision of payments and financial services through the use
of mobile technology infrastructure including, electronic terminals, and credit tokens

effectiveness, and efficiency of the financial sector. Key elements of building an effective
regulatory system for DFS include:
Creating an enabling regulatory environment to encourage entry of new players, which

promotes competition and in turn spurs innovation in the DFS sector
Instituting transaction limits and know-your-customer (KYC) requirements
proportionate to perceived risk (including tiered KYC that allows small value
transactions with little or no KYC)
Encouraging interoperability and interconnection between providers to accelerate DFS
ecosystem development
Providing guidelines for emerging distribution models, such as shared agent networks
and agent aggregators, that will accelerate the spread of the agent network and reduce
operating costs
Ensuring a level playing field by making sure dominant players do not exploit their
position by blocking access to agents and critical communication channels, such as
USSD
Donors and other stakeholders can help the CBM fill these gaps by providing technical
assistance towards the creation of such enabling regulations aimed at accelerating the growth
of DFS and enabling its contribution towards greater financial inclusion in Myanmar.
Stakeholders can also support the industry as whole by undertaking assessments for different
models, sharing global best practices, and playing the role of an honest broker to facilitate
dialogue through workshops and seminars.

G | Agriculture Sector Analysis and Value Chain

Transaction Flows
Turning to the sector-level analysis, the assessment
focuses on agriculture because of its role as a key driver
of Myanmars economy. Agriculture accounts for 30 40
percent of the countrys GDP, 66 percent of employment
(32.5 million individuals), and 25 30 percent of exports
by value, with pulses, rice, rubber, and fisheries being the
main export commodities. 14 Agriculture is therefore a
critical means of livelihood throughout Myanmar.
Although livelihood strategies are diverse across the
countrys various regions, the sale of agricultural
products is consistently the most significant stream of
household income nationwide, followed by casual labor in agriculture.15
The four value chains that are the focus of this study - rice, sesame, pulses, and aquaculture
represent 6.5 million of the 12.1 million farmers in Myanmar, capturing the bulk of agricultural
economic activity in the country. A breakdown of the contribution of the selected value chains
by number of farmers, production levels, and area of acres planted is included in Table 2.
Table 2: Breakdown of the contribution of the selected value chains to agriculture
Value Chain
Number of
Farmers
Production
(Metric Tons MT)
Area Planted Acres
Rice
2.15 million
32.6 million MT of paddy

(21.2 million MT of rice)
19.9 million (16.8

monsoon crop and 3.1
summer crop)
Sesame
1.3 million
890,000 MT
3.9 million acres
Pulses
3 million
5.3 million MT
9.9 million acres
Aquaculture
100,000
826,900 MT
226,954 acres
Total (4 value
chains)
6.55 million
39.6 million MT
33.9 acres
Total in Myanmar
12.1 million
30 40 percent of GDP
55.56 million acres
For each value chain, the following sections provide a description of their contribution to
Myanmars economy; a mapping of the transaction structure, flow, and payment methods on
the buyer side; and an estimate of the cost of production (comprised of expenditures on the
supplier side).
14
15
World Bank, 2013, p. 7

LIFT, 2013, p. 45

RICE
Rice is the food staple of Myanmar and is strategically important to the agricultural sector.
Rice production accounts for 33 percent of all agricultural land planted each year,16 contributes
three quarters of farm household income, and constitutes 73 80 percent of the daily dietary
energy requirement. 17 Rice is planted throughout the country, but is most dominant in the
Ayeyarwaddy and Bago Divisions, where production is in surplus. A proportion of harvest is
always consumed within the household to meet food needs and surplus is traded through
wholesale markets to deficit areas. The main trading centers for rice are Pathein, Yangon, and
Mandalay. Additional details on the rice value chain, including the Paddy Production Calendar,
can be found in Annex 6.
Rice: Buyer Side
The transaction structure of the rice value chain, with a mapping of the value chain actors,
transaction structure and flow, and payment methods, is depicted in Figure 9 (see Annex 6 |
Additional Details on the Rice Value Chain for additional transaction details and a description
of each of the value chain actors).
Figure 9: Transaction structure of the rice value chain in Myanmar (based on modeled data obtained through primary data
gathering and secondary sources)
The first level of transactions on the buyer side of the rice value chain consists of the purchase
16
17
Wong, 2013, p. 4
Wong, 2013

of paddy from farmers by brokers, millers, or collectors, who work on the behalf of millers or
brokers. Since all paddy produced needs to pass through this stage, millerseither directly or
via collectorsare a key interaction point, as they interface directly with producers and
upstream actors. Transactions with farmers and all but the largest millers are conducted using
cash and can be characterized by a high volume of small value transactions. While millers
occupy a key position in the value chain, collectors are also an important transaction point.
Particularly in areas far from main markets and exchanges, farmers sell to collectors, who
arrange the logistics and are able to bulk sufficient quantities to provide market access.
Rice: Supplier Side
Input supply requirements peak in June and January, coinciding with planting and crop
development. In paddy production, peak labor demand is associated with planting and
harvesting, with reduced need during the season for input applications and weeding.
Expenditures, and therefore the greatest demand for credit, occur during the start of the season
between May and June, as well as during harvesting between October and December.
In comparing the cost of production for small farmers (under 5 acres of production) and large
farmers (over 10 acres of production), the cost of production is higher on a per acre basis for
small farmers, as input prices are higher (presumably due to the smaller quantities being
bought). Larger farmers spend significantly less on labor and equipment rental, as they are
much more likely to own equipment. The cost of production and estimates of the credit gap of
rice farmers is shown in Table 3.
Table 3: Cost of production, and estimation of credit gap of
small and large rice farmers
Inputs
Small Farmers
MMK
USD*
Large
Farmers
MMK
USD*
Seed
15,363
15.84
12,589
12.98
Fertilizer
44,977
46.37
40,470
41.72
Pesticides
2,611
2.69
555
0.57
Subtotal
62,951
64.90
41,025
42.29
Labor
68,526
70.65
41,025
42.29
Equipment rental
19,575
20.18
6,840
7.05
Fuel
Draught Oxen
17,548
13,010
18.09
13.41
6,808
1,960
7.02
2.02
50,133
51.68
15,608
16.09
Other
19,966
20.58
7,390
7.62
Total
196,973
203.06
110,247
113.66
Revenue from paddy sales
313,128
322.81
239,545
246.95
Gross Margin
116,155
119.75
129,298
133.30
Subtotal
% costs met by MADB loan
51%
91%
Credit Gap (wet season paddy)

96,973
99.97
10,247
10.56
*Data is from a secondary source, so exchange rate between the USD and MMK differs from the
USD 1 = MMK 1,115 rate
SESAME (OIL SEEDS)

In 2011, Myanmar was the largest producer of sesame globally, producing 900,000 MT. Of
Myanmars exported commodities, sesame ranks fourth in terms of export value, accounting
for 94 percent of Myanmars oil seed exports (worth USD 54 million in 2013).18 Sesame oil
also accounts for the second largest household expenditure in Myanmar after rice.19
Regarding uses and final products for sesame, the majority of sesame production is crushed for
oil via millers (41 percent), exported (23 percent), or used for various applications for snacks
and confectionary (7 percent). The milling process also produces a nutrient-rich cake byproduct, which is used as a constituent of animal and fish feeds. Rapid growth of the poultry
and aquaculture industries has led to high demand for cake by-product from the milling of oil
seeds. Additional details on the sesame value chain, including the Sesame Production Calendar,
Sesame: Buyer Side
The transaction structure of the sesame value chain, with a mapping of the value chain actors,
transaction structure and flow, and payment methods is depicted in Figure 10 (see Annex 7 for
additional transaction details, along with a description of each of the value chain actors).
Figure 10: Transaction structure of the sesame value chain in Myanmar (based on modeled data obtained through primary data
gathering and secondary sources)
18
19
International Trade Centre, 2014

FAO, 2015

Payments are predominantly made in cash along the whole chain, although both cash and bank
transfers are used in some transactions at higher levels in the value chain. Large millers
typically deal with large clients; between these actors, bank transfers are also used when the
transaction size is too large for cash. Only large exporter transactions are regularly conducted
using bank transfers.
The majority of sesame is moved to mills and commodity exchanges via a network of
middlemen consisting of primary collectors, commissioning agents, and brokers. Contracts are
used at the higher-end of the value chain to deal with larger volumes, and are commonly settled
using bank transfers. All other transactions between actors are verbally agreed upon and settled
in cash.
Small and medium-sized rural traders and brokers play a key role in this value chain, as they
are the interface with producers and conduct business on behalf of the other major value chain
actors. In this position, they handle more produce and transactions than any other group. They
are also characterized by the lowest average transaction size. Larger traders who are members
of commodity exchanges typically work with around 50 rural traders, and serve as the main
channel for sesame exports.
Sesame: Supplier Side
Sesame is a low margin crop and the cost of production is managed by retaining seed from the
previous harvest and using manure over fertilizers. Around harvest, however, there is typically
a shortage of labor, which drives the cost of labor to MMK 4,000 per day, compared with
MMK 1,500 during the rest of the production cycle. In some instances, an advance is paid to
retain the laborer and the balance is paid upon completion. These payments are always settled
in cash and usually immediately, but in some cases, laborers are asked to wait for crop sales.
Labor for land preparation is also a substantial expense, though mechanized solutions are used
when land must be prepared quickly.
In terms of financing, sesame farmers meet costs primarily through their own funding or with
financing through informal channels involving friends, family, or money lenders. These
informal channels typically charge 5 7 percent interest per month. Some farmers do obtain
MADB loans of MMK 20,000 kyat per acre up to 10 acres over eight months (at 0.48 percent
interest), but this covers barely one third of the cost of production. Group loans of MKK
100,000 are also available to members of cooperatives (through Central Cooperative Society
members) with a term of six months at 1.5 percent interest.

Table 4: Cost of production monsoon sesame in MMK and USD20
Monsoon Sesame
Inputs
MMK
USD*
Seed
Fertilizer
Pesticides
9,537
7,508
1,648
9.83
7.74
1.70
Subtotal
Labor
18,693
26,176
19.27
26.99
Subtotal
Equipment rental
Fuel
Draught Oxen
26,176
567
405
4,752
26.99
0.58
0.42
4.90
5,724
6,452
5.90
6.65
60,130
117,072
56942
61.99
120.69
58.70
Subtotal
Other
TOTAL
Revenue
Gross Margin
*Data is from a secondary source, so exchange rate between the USD and MMK differs from the
USD 1 = MMK 1,115 rate.
PULSES (GREEN GRAM)

Pulses, consisting of black gram (black lentil), green gram (mung bean), chickpea, and pigeon
pea, are the largest export commodities from Myanmar. In 2012, exports of pulses were valued
at USD 913 million (0),21 making Myanmar is the third largest exporter of beans and pulses
globally. Since 90 95 percent of green gram, black gram, and pigeon pea are exported, these
figures provide a strong indication of the amount of crop sown and the transaction activity
along the value chain in a given season (note: there is a large disparity between official
production figures and the actual volumes exported by a factor of 2 to 3 - see Annex 8).22
The short cropping cycles of green and black gram enable farmers to plant these crops
following rice from residual soil moisture. 23 Production of green and black gram therefore
supplements income from rice in the Delta, while chickpea is often planted following rice in
the Dry Zone. Although pulse production has significantly contributed to livelihoods in these
regions, farmers need to turn the crops around quickly to maximize the impact from residual
soil moisture, which often leads to the sale of wet paddy, compromising the quality of the rice
produce. Additional details on the pulses value chain, including the Pulses Production Calendar,
20
Agrifood Consulting International, 2014

International Trade Centre, 2014, p. 1
22 Steven Haggblade, 2014, p. 3
23 Steven Haggblade, 2014, p. 6
21


Green Gram: Buyer side
The transaction structure of the green gram value chain, with a mapping of the value chain
actors, transaction structure and flow, and payment methods is depicted in Figure 11 (see
Annex 8 for additional transaction details, along with a description of each of the value chain
actors).
Figure 11: Transaction structure of the green gram value chain in Myanmar (based on modeled data obtained through primary
data gathering and secondary sources)
At the first level of transactions, green gram is bought from farmers by rural traders, with whom
they typically have long-established relationships. Cash is used for all transactions at this level.
Once crop is purchased, traders often immediately store the produce in warehouses. This
practice enables rural traders and wholesalers to aggregate stock to offer to the market through
commodity exchanges (CEXCs). CEXCs trade daily with the large terminal market in Yangon.
In cases where traders are located close to Yangon, the crop is commonly marketed directly to
this large terminal market. Cash is used for transactions between CEXCs and rural traders,
while both cash and bank transfers are used for transactions between CEXCs and retailers,
depending on the size of the transactions. Exporters also operate in this terminal market.
Between exporters and CEXC traders, bank transfers are used for transactions. Both cash and
bank transfers are used for transactions between exporters and feed companies.
Pulses: Supplier Side

Like sesame, farmers retain seed for a number of years from their harvests, without significant
reduction in vigor. Use of tractors for land preparation by large farmers is commonplace (80
percent of large farmer participants in the FGDs noted use of tractors). 24 This is a recent
development, as availability of equipment has become more widespread. Tractors are rented
from operators and though large farmers in the FGDs expressed desire to own, they are
typically are not able to afford them.
The cost of product for green gram, both for mechanized land preparation and land preparation
with the use of a draught animal, is shown in Table 5. Although the costs for mechanized land
preparation are slightly higher than with the use of a draught animal, the turnaround time is
substantially less. Shorter land preparation times enable farmers to plant earlier, which
maximizes the utilization of residual soil moisture and reduces risk of moisture stress.
Table 5: Cost of production of green gram
Green Gram
(Mechanized Land
Preparation)
Inputs
MKK
Seed
Green Gram
(Land Preparation with Draught
Animal)
USD
MKK
USD
5,000
5.15
5,000
5.15
Fertilizer
25,000
25.77
25,000
25.77
Pesticides
15,000
15.46
15,000
15.46
Subtotal
45,000
46.39
45,000
46.39
129,000
132.99
129,000
132.99
62,000
63.92
0.00
0.00
57,000
58.76
62,000
63.92
57,000
58.76
Total
241,000
248.45
236,000
243.30
Revenue
253,328
227.20
253,328
227.20
12,328
12.71
17,328
17.86
Labor
Equipment
rental
Draught Oxen
Subtotal
Gross Margin
24
Focus Group Discussion

AQUACULTURE
Fish products provide 75 percent of protein intake in Myanmar and represent 10 to 15 percent
of household expenditure. 25 Although the aquaculture export industry has declined due to
steady appreciation of the kyat against the U.S. dollar since 2012, there has been increased
demand from upper Myanmar for fish products. The local market has therefore driven growth
of the aquaculture sector, which has also been facilitated by deregulation and improved road
infrastructure.26 As inland capture fisheries have declined, pond fisheries have shown the most
rapid growth.27 Pond fisheries also demand large amounts of feed for the fish, and therefore
stimulate more transactions than capture fisheries.
Aquaculture: Buyer Side
The transaction structure of the aquaculture value chain, with a mapping of the value chain
actors, transaction structure and flow, and payment methods is depicted in Figure 12 (see
Annex 9 for additional transaction details, along with a description of each of the value chain
actors).
Figure 12: Transaction structure of the aquaculture value chain in Myanmar (based on modeled data obtained through
primary data gathering and secondary sources)
25
Aung, Shein, & Soe, 2014

MDRI/MSU, 2015
27 Win, 2004
26

Since fresh fish needs to move quickly to market, aquaculture has the shortest and most
integrated chain. Due to the need to provide feed fish throughout the production cycle, this
value chain has very different transactional needs than the others in this study. Feed accounts
for the bulk of production costs and traders who buy fish also play a role in financing the
production by supplying credit or assisting in sourcing feed stock. A range of service providers
have developed, which supply small fish to stock ponds and transport on boat and vehicles to
markets. The central fish market, San Paya, is the hub for transactions and is where fish is
distributed to other urban centers.
Aquaculture: Supplier Side
As shown in Table 6, the cost of production in aquaculture is estimated to be approximately
USD 5,625 per acre. As such, the supply of inputs account for much higher expenditure than
the other value chains, with feed alone accounting for 79 percent of the cost of production.
Manufacture of aquaculture feed is increasing, though accounts for less than 20 percent of the
total feed demand. 28 Small and medium pond owners use raw materials whereas larger
operations procure manufactured feed.
With respect to credit, money is borrowed from traders and brokers for the feed in the form of
an advance against securing production. Close relations with traders in the Yangon San Paya
market enable finance for inputs to be obtained. However, the need for large amounts of
working capital, which are required particularly to finance the high costs of building and
maintaining ponds, has typically meant that the majority of pond owners are wealthy. In the
FGDs conducted in this study, pond owners highlighted the need to finance feed for the ponds.
Where this cannot be obtained, sub-optimal amount of feed is provided, which has a large
impact on final yield.
Table 6: Cost of production per acre of fish pond
Item
MKK
USD
Labor permanent
240,000
215.25
Nursery Fish
600000
538.12
4,959,900
4,448.34
Pumping
64,000
57.40
Other Inputs
45,800
41.08
360,000
322.87
3200
2.87
6,272,900
5,625.92
Feed
Harvesting
Transport of production
Total
28
MDRI/MSU, 2015

H | Agriculture sector challenges and financial services

needs
Across the value chains, there were a number of overarching
constraints identified, which impede their development and
competitiveness. An understanding of these challenges faced by
value chain actors is critical to the development of DFS offerings
in order to ensure that products are appropriately designed and
tailored to address the sectors needs. These challenges include:
As we are poor farmers with a few acreswe cannot always
afford to hire the machine for the entire duration of the time that
we need it. So we hire it for one day, then find the money for
another day if we need it again. - Small rice farmer, Delta
Insufficient access to and application of inputs (seeds, fertilizer, pesticides):

Limited access to quality seeds and low application rates of inputs (such as nutrients
and pesticides) have contributed to the stagnation and decline of productivity in
Myanmars agriculture sector. This is due in part to issues such as shortage of supply
and fluctuations in the exchange rate, which have increased costs of inputs. However,
lack of financing is one of the main constraints to sufficient usage of inputs.
In the rice value chain, farmers lack access to financing to obtain sufficient quantities
of inputs, such as fertilizer, which are needed to raise production. Declining rates of
fertilizer application is a major cause of the widening yield gap between Myanmar and
global rice yields (see Annex 6).
Low levels of nutrient application is also cause of low yields in the sesame value chain,
as farmers often attempt double or triple cropping of land without adequate nutrient
supply.
In the pulses value chain, the green gram crop requires more intensive pest management
than other pulses, resulting in significantly higher costs to purchase the inputs required
to grow green gram (MMK 30 40,000/acre). As a result, farmers do not often take
sufficient measures to reduce losses to pests (such as through application of Rhizobium,
a nitrogen-fixing bacteria), which affects the quality and yield of green gram crops.
Additionally, in the aquaculture value chain, feed accounts for the most significant
component of the cost of production and dictates the productivity from ponds. However,
farmers face substantial challenges in meeting feed demands, as available credit is often
insufficient to provide feed in the volumes required to achieve potential yields.

Labor shortages and limited access to equipment:

There is a rising trend in Myanmar of labor migration, as rural populations move to find
higher, more stable income. This has resulted in labor shortages that impact all four
value chains, driving up the cost of labor and production. Financing to support a shift
towards mechanization would support farmers in reducing the need for seasonal labor,
and also promote time-saving production practices.
In the pulses value chain, many farmers elect to plant green gram immediately after rice
is harvested, utilizing the residual soil moisture. Due to labor shortages for rice
threshing and preparation, however, the green gram crop is frequently planted late,
which results in moisture stress that increases the risk of disappointing yields and crop
failure. The use of mechanized threshing would decrease the turnaround time by 7 14
days, saving valuable time in planting the green gram crop.
Additionally, the aquaculture value chain utilizes permanent labor more than other
value chains, and the proximity of centers of production to Yangon results in higher
levels of outmigration from aquaculture producing regions. As with the other value
chains, this trend has resulted in higher wages and shortages of labor for harvest and
pond maintenance / construction.
It is difficult to hire laborer[s]. The wages of labor is very high and we cannot make a lot of profit
because of high wages of laborer[s]. - Large green gram farmer, Dry Zone
Low investment in technical knowledge:

.
Over the past few decades, the government has sought to secure supply and stabilize
the price for the domestic oil seed market. The sector has therefore been through a
number of regulatory cycles, including a period during which exports were banned
between 1998 and 2006. 29 The uncertainty created by this policy environment has
restricted growth and investment in the sesame value chain. Given the poor economic
environment for this crop, investment in knowledge has been weak, but significant
production improvements can be achieved by improving the diffusion of best
practices.30
In the aquaculture value chain, the quality of fish reared is variable, due in part to
limited technical knowledge. Dissemination of best practice guidelines are required
urgently to improve quality of production.
Limited availability of appropriately structured credit, insurance, and savings products:
Improved availability and flexibility of agricultural financing for agricultural
production could help to address many of the challenges above, notably access to inputs
and equipment. Even in cases where credit is available, it is often not appropriately
structured considering farmers production cycles, as noted in Section E.
29
30

International Trade Centre, 2014, p. 10

Lack of insurance and savings products also increases risks for farmers, as there is no
safety net to fall on in case of crop loss. This also leads to over indebtedness of farmers
to moneylenders.
These challenges interact to trap farmers in a vicious cycle. Limited supply of credit results in
insufficient application of inputs, leading to low yields and high post-harvest losses
(particularly for rice), which in turn reduces farm income. The high degree to which
Myanmars agriculture sector is undercapitalized and the extent to which financial services for
the sector is underdeveloped directly impact growth and productivity in the sector. This impact
is demonstrated by the great disparity in agricultural annual income per worker, which is USD
194 / year in Myanmar, compared with USD 6,680 in Malaysia, USD 1,119 in the Philippines,
USD $706 in Thailand, and USD $434 in Cambodia.31
31
World Bank, Myanmar Agricultural Development Bank: Initial Assessment and Restructuring Options, 2014.

I | Potential Applications of DFS

In light of these challenges, DFS can provide solutions by
leveraging low cost channels and access points, which
would help financial institutions overcome the current
infrastructure and network challenges that hinder their
ability to scale-up their involvement in the agriculture sector,
and rural markets in general. Rural populations would
benefit from increased convenience and decreased costs in
terms of time and money spent accessing financial services.
In this context, growth of the DFS industry in Myanmar
enables the development of strategic partnerships, channels,
instruments, and business models to be built, which facilitate
the design and delivery of targeted financial products and services for value chain actors. In
turn, enhanced access to these financial products and services would boost productivity and
improve efficiency along the value chains. Recommendations for potential applications of DFS
are structured across two categories: a) applications of DFS to address agriculture sector
challenges; and b) recommendations to promote DFS ecosystem development.
RECOMMENDATIONS TO ADDRESS SECTOR CHALLENGES
A matrix summarizing the key constraints to agriculture sector growth and potential
applications of DFS to deliver the financial services needed to help address these challenges is
illustrated in the table below.
Agriculture Sector Challenges & Potential Applications of DFS
Areas to Support
DFS Development
Potential DFS Applications
Burma's Agriculture Sector

Challenges
Transfers & Payments
Savings
Credit
Insurance
Poor Infrastructure
Market Volatility
Lack of Input Financing
Adverse Weather
- Expensive for FIs to serve

rural areas
- Sustaining price/demand
fluctuations
- Fertilizer and seeds
- Weather fluctuations
- Insecticides and sprays
- Climate change
Limited Footprint of Formal

Financial Services
Strong Liquidity Pressures
Lack of Asset Financing
Natural Calamities
- Farmers sell produce at low

rates for immediate liquidity
- Antiquated farming methods
- Floods
- Labour shortages
- Cyclones
Lack of Liquidity
Infestations & Diseases
- Land preparation
- Pests
- Harvest
- Parasites
- Traveling to branches is
inconvenient and expensive
Efficient Delivery of Formal Financial Services Through Agents and Digital Accounts
e.g. Remote and proximity
e.g. Account opening, deposits,
e.g. Disbursements and
e.g. Premium pay-outs for
payments for inputs, receiving
and withdrawals for
collections of Micro-Loans
micro-insurance
payment from sale of produce, microsavings
etc.
Facilitate Product and Model Innovations
Input financing through savingslinked wallets
Expansion and development of

tailored agri financing
products, e.g credit from
banks, MFIs, savings and
credit cooperatives; input
financing; and equipment
leasing
e.g. Weather index-based

insurance products
Promote Development of a Robust DFS Ecosystem

- Create an enabling regulatory environment
- Develop a strong agent network
- Strengthen MFIs and NGOs
Develop Customer-Centric Products

- Segmentation
- Human Centered Design

Mechanisms to assess farmer
credit worthiness
Development of indexes and

monitoring techniques

Efficient Delivery of Formal Financial Services through Agents and Digital Channels
DFS has the potential to accelerate agricultural growth in rural areas by enabling the delivery
of financial services through agent locations and digital wallets. Agents and mobile phones
provide financial institutions with the opportunity to expand their outreach and penetrate rural
areas to offer a portfolio of tailored products spanning transfers, savings, credit, and insurance
to address key challenges faced by Myanmars farmers.
Transfers and Payments
DFS will allow Myanmars value chain actors to avail of payment facilities without having to
travel to bank branches. This will also enable farmers and other value chain actors to move
away from cash-based payments to more efficient digital mechanisms, conveniently accessed
through their mobile handsets or at a nearby agent location.
During the FGDs, the most often-cited reason for farmers interest in mobile financial services
was the potential savings in terms of time and transportation costs by not having to travel to
the bank. Transitioning to DFS would mean that value chain actors can immediately send and
receive payments and make transfers for a variety of reasons that could include:
I dont need to go to the bank to
transfer money. So, I can save the
transportation charge.- Large
chickpea farmer, Dry Zone, on interest
in using mobile money
Paying inputs suppliers

Paying labour, workers, transporters, and other
service providers
Receiving payment from buyers
Based on the mapping of transaction flows across the four value chains, nearly 5 million cash
transactions are conducted between farmers, collectors of produce, and millers / exporters per
crop cycle, exceeding a value of USD 8 billion. Digitizing these transactions would bring
hundreds of thousands of new clients into the formal financial system and bring benefits to
farmers and the entire value chain by reducing costs and increasing efficiency, allowing value
chain actors to immediately send and receive payments for inputs, labor, transportation, and
sale of produce. A study by Tufts University in Niger estimates that the time savings
attributable to the digital transfer channel for each payment translated into an amount large
enough to feed a family of five for a day.32
One potential initiative relevant to Myanmars agriculture sector is the digitization of payments
for inputs. For example, Red Dot, an electronic POS provider, has established a cash
acceptance network that can be accessed through terminals placed in shops or through a mobile
app. Red Dot agents open a merchant account, through which they can distribute airtime, accept
retail payments for household goods, and eventually accept utility bill payments. Such
How do Electronic Transfers Compare? Evidence from a Mobile Money Cash Transfer Experiment in Niger.
September 2013. sites.tufts.edu/jennyaker/files/2010/02/Zap-it-to-me_12Sept2013_No-Appendices.pdf
32

merchant payment services can be expanded to the agriculture sector, enabling farmers to make
retail payments for inputs through a mobile- or card-based instrument. Red Dot has shown
willingness to partner with suitable players and pilot tailored services in rural markets for
assessing the segments response.
A Pathway to Digital Financial Inclusion
A growing body of evidence suggests that poor households connectivity to an integrated
digital financial system broadly supports the achievement of direct welfare benefits. These
benefits span several channels, including (i) access to a basic store-of-value account, (ii)
payment connections to peers, (iii) connections to institutions (e.g. utility companies,
enterprises, governments), and (iv) access to enhanced financial services (e.g. savings,
credit, insurance). However, the migration from a cash environment to a digital economy
is not to be envisioned as occurring in a single bound. Economies are rather likely to pass
through several stages of market development along the path to an inclusive digital
economy. Of course, it is to be expected that many countries may chart unique pathways
which leapfrog or even reverse certain stages. A general pathway to digital financial
inclusion may be hypothesized as according to the following four key stages:
Stage 1. Basic Connectivity - Critical mass of mobile coverage and penetration

among the rural poor.
Stage 2. Digital Remote Payments - Poor people adopt and use digital channels for
person-to-person transfers and government payments.
Stage 3. Full Range of Digital Financial Services - Poor people adopt and use
digital channels for savings, credits, insurance services, and other financial services
Stage 4. DFS Plus - Poor people conduct a majority of transactions, from payments
to merchants and vendors to installments for infrastructural improvements and
substitutes.
Source: A Digital Pathway to Financial Inclusion, Daniel Radcliffe and Rodger

Voorhies, Bill & Melinda Gates Foundation, 2012.
Savings through DFS
Savings are especially important for the agriculture sector, which is characterized by
seasonality, irregular revenues, and exogenous risks. Assessments of input-finance-linked
savings accounts similar to the National Microfinance Banks Kilimo Account33 in Tanzania
and the Commitment Savings Product offered by Opportunity Bank of Malawi,34 show that
farmers can be effectively encouraged to save from their earnings, and farmers that saved
cultivated significantly more land and invested more in agricultural inputs.
33
34
Innovative Agricultural Sme Finance Models, GPFI & IFC, 2012

Facilitating Savings for Agriculture: Field Experimental Evidence from Malawi, 2015

DFS-based mobile wallets can offer flexible and convenient savings mechanisms for value
chain actors, which would enable them to save even small amounts cost-effectively. By
facilitating savings, DFS can allow Myanmars smallholder farmers to manage liquidity
between agricultural cycles, undertake investment, and use yield-enhancing inputs, reducing
their dependency on external sources of finance.
Many participants in the study reported that they had very little amounts of money to save, or
that they saved in non-liquid assets such as livestock, which are vulnerable to disease and
natural disasters. Although encouraging savings in a formal account would require behavior
change, farmer-focused DFS savings accounts if coupled with financial literacy and client
protection programs (such as those promoted in Myanmars national financial literacy plan,
which is being developed with support of the Asian Development Bank) could encourage
farmers to save through formal mechanisms. These accounts can reside on a financial
institutions core banking system, but should be accessible and easy to open at agent locations,
require a small (or zero) initial deposit, and have little (or no) balance requirements or
administration fees. For example, the M-Shwari standard savings account does not require a
minimum balance for savers to accrue interest, though M-Shwaris fixed deposit account offers
the option to realize higher interest rates if a minimum balance is kept. Utilizing information
from a customers mobile phone registration and M-Pesa account, M-Shwari also enables the
opening of an account in less than a minute.
This digital account or wallet could be offered by FIs, MNOs, joint-ventures (JVs) between
banks and MNOs, or even companies such as RedDot (depending on the outcome of the mobile
money regulations). Farmers could use this account to send or receive money, safely store
money, and/or pay for inputs or receive payments from millers, collectors, and other upstream
actors.
Credit Delivery through DFS
DFS can also help to bridge one of the foremost challenges faced by Myanmars agriculture
sector, which is the scarcity of finance. Adequate and timely supply of credit to Myanmars
farmers is critical so that they can cover production costs including those related to inputs,
labor, equipment, and transport. Furthermore, farmers require means of investing in equipment,
which is necessary for improving farming methods and coping with increasing labor shortages.
Currently, one of the key constraints that MFIs and banks in Myanmar face in increasing
lending to the agriculture sector is the high cost of cash management, disbursement, and
collection associated with operating in rural areas. These realities, combined with regulations
that cap interest rates, make it difficult for financial institutions to administer loans efficiently.
For instance, PACT Global Microfinance Fund and World Vision both cited the need to reduce
the cost and risks associated with cash handling. Digital channels can expand the availability
of credit to rural actors by providing a cost-effective and efficient means to expand outreach to
these segments.

DFS is being used successfully in many developing countries across Asia and Africa for
disbursements and collections of loans, and studies have shown that MFIs and NGOs can save
up to 15 percent to 25 percent on the costs associated with delivering loans in rural areas.
Donors can support uptake and instill efficiency and transparency in their programs by
embedding DFS into program design, and encouraging their implementing partners (MFIs and
NGOs) to use digital channels for disbursements and collections. Wallets can also be leveraged
for delivering subsidies and input credit, as is being done by Cellulant Nigeria (see text box
below).
Considering Myanmars underdeveloped infrastructure, there is also an opportunity to bridge
infrastructure gaps through pay-as-you-go financing, delivered through digital channels, for
the use of equipment such as solar panels and solar pumps. Solutions are already being
developed in Myanmar to digitize payment streams for traditional electricity bill payments.
Namely, Leo Tech, a technology company based in Singapore with presence in Myanmar, has
partnered with CB Bank to develop a mobile app for electricity bill payments. In addition to
streamlining the payments aspect of access to energy, DFS presents an opportunity to develop
new business models that solve the financing constraint that lower-income segments living offgrid face in accessing energy. A pay-as-you-go model for solar energy would enable rural
households and businesses to receive a solar product and pre-pay for energy credits using a
card or mobile-based instrument and channel.
Addressing the formal financing gap can serve as a potent strategy to accelerate adoption of
wallets and increase financial inclusion. Benefits of leveraging wallet-based credit include:
1. Credit will drive farmer trial: The fact that the majority of farmers participating in the
FGDs had banks books shows that they are willing to adapt for the sake of credit. Credit,
provided that is flexible enough to meet the unique needs of smallholder farmers, can
potentially drive behavior change and encourage trial.
2. Enhanced agriculture production: Provision of finance through DFS designed with a
focus on increasing farming yields and income will enable farmers to use better inputs,
modernize their techniques, and mechanize their operations, enabling their journey out
of poverty.
3. Assist diffusion of DFS in rural areas: Promoting adoption of DFS by farmers through
credit can also be a part of a diffusion strategy for DFS. Once farmers have active wallet
accounts, they can be encouraged to use it not only for receiving credit, but also for
making transfers and receiving payments, both upstream (brokers, millers) and
downstream (input providers).

CELLULANTS AGRICULTURE-FOCUSED WALLETS IN NIGERIA

Cellulant Nigeria, a mobile wallet provider, is powering the Government of Nigerias
Growth Enhancement Support Scheme (GES) by providing a secure, convenient, and
affordable means of delivering credit to millions of Nigerian farmers. The Cellulant
Wallet is being used to route credit and subsidies to farmers so they can purchase
fertilizer, seedlings, and other inputs from agro-dealers. To enable redemption, the
company has deployed appropriate technologies, including Point-of-Sale terminals
(POS) at agro-dealers, which also enables these dealers to become mobile money agents
and offer additional financial services in rural areas.
Launched in 2011, Cellulants solution had been successfully leveraged to reach 10
million farmers as of May 2014. With more than 70 million transactions processed as of
May 2015, delivering more than 1.3 million metric tons of fertilizer and improved seeds,
the Cellulant Wallets are proving to be a potent tool for empowering farmers to increase
their yields and enabling them to escape poverty.
http://thenationonlineng.net/new/ata-cellulants-e-wallet-processes-70m-transactions/
http://newtelegraphonline.com/10m-farmers-captured-agric-e-wallet-scheme/
Insurance through DFS

Managing the risks associated with agricultural
production is critical for Myanmars
agriculture-based rural economy. Flooding,
tropical storms, and drought are the three main
agricultural risks in Myanmar. Natural
calamities such as cyclone Nargis and the recent
floods have damaged 8 percent (1.2 million
acres) of Myanmars rice fields (per UNDP
estimates), making agriculture insurance
products vital.
Globally, a variety of traditional and weather
index-based agricultural insurance products 35
have been designed to help farmers better cope
with the risk (see the table to the right). These
products could substantially benefit farmers in
Myanmar, providing them with the ability to
manage shocks. DFS can help to effectively
deliver insurance products on a large scale to
35
Agricultural Insurance Products

Traditional crop & livestock indemnity
products
Named-peril crop insurance (e.g. hail)
Multiple-peril crop insurance (yield
guarantee)
Revenue insurance (yield & some price
protection)
Livestock mortality insurance
Index-based products
Weather index products
Area yield index products
Livestock index products
Agricultural Insurance: Scope and Limitations for Rural Risk Management, Worldbank, 2009

Myanmars farmers through agents and wallets, and greatly reduce the transaction costs
associated with payment of installments and claim payouts.
Agent networks and mobile channels in various initiatives around the world are proving to be
efficient means of distributing micro-insurance products. Specifically, Kilimo Salama and
Juhudi Kilimo in Kenya36 and FarmerShield in Zambia37 are examples of insurance providers
leveraging mobile technologies to reach smallholder farmers. Recognizing this market need
and opportunity in Myanmar, Sompo Japan Nipponkoa Group, a Japanese insurance company,
has recently committed to offering weather index insurance to 30,000 small-scale farmers in
Southeast Asia by 2025, including rice and sesame farmers in Myanmar. Coordination and
support from industry stakeholders to ensure the development and scale-up of such initiatives
will be important to accelerate the availability of such services in the country.
Natural Disasters and Mitigation in Myanmar
The damaging effects of natural disasters - most prominently floods and typhoons - on
agricultural livelihoods in Myanmar would be difficult to overstate. Just this year, the
commencement of Myanmars lean season in July and August was marked by the passing
of Cyclone Komen. The significant rise in monsoonal floodwaters in 12 of the countrys
regions and states - embodied in regular flooding and landslides - contributed to the
displacement of 1.6 million people, the inundation of over 500,000 hectares of farmland,
and the deaths of more than 250,000 animals. In Ayerarwady state, for example, 80
percent of the cultivated flooded area was completely destroyed.1
While mitigating risks of natural disasters is generally expensive and difficult where at
all possible, immense progress has been made in the area of microinsurance, especially
in weather-index insurance. When insurance payouts follow a benchmark index, benefits
payments can be targeted to beneficiaries who suffer the worst losses.2 Micro-premiums
as low as USD 2 are made possible by the replacement of key features and transactions
of a traditional insurance model with technology-based solutions, notably including the
use of mobile technology to locate, register, and pay farmers. This reduces the cost of
sales teams and payout distribution mechanisms.
Agriculture and Livelihood Flood Impact Assessment in Myanmar. FAO and WFP,
October 2015.
1
Hans Dellien (principal author), IFC, Agricultural Lending: A How-To Guide.

Vietnam, 2015.
2
36
37
Serving Smallholder Farmers: Recent Developments in Digital Finance, CGAP, 2014

Mobile payments How Digital Finance is transforming agriculture, Centre for Agricultural and Rural Cooperation (CTA), 2015

Development of Customer-Centric Products

Where DFS is a robust channel for serving lower-income segments, particularly those living in
rural areas, it is important to remember that the channel alone is not sufficient; an equally robust
product portfolio has to be built around it. This is particularly important for Myanmar, where
satisfaction and trust in informal mechanisms is displayed by all agriculture sector actors.
Donors and other stakeholders can assist financial institutions and DFS providers create needbased products by:
Commissioning customer segmentation and behavior studies that provide insights
and perspectives for designing effective products and marketing and
communications campaigns
Providing technical support and funding to pilot new products that establish proofof-concepts
Providing support for the design of customer-centric DFS products based on
human-centered design (HCD) principles
Assisting the Central Bank develop policies and laws that will enable the roll-out
of innovative products and financing mechanisms
The table below expounds further upon the opportunities to leverage DFS in the expansion of
financial products and services delivery. This includes variations of the financing
mechanisms presented above, as well as alternative models to address value chain actors
various financing constraints.
Product
Description
DFS Opportunity
Savings and
credit from
self-help
groups and
cooperatives
Group savings
schemes and
cooperatives,
which can support
individuals or
groups for costs of
production and
equipment
purchases
Link informal savings groups to formal FIs through

digital channels. Linkages between savings groups
and FIs could provide enhanced security for the
groups cash deposits, encourage more effective
savings mobilization, and expand the FIs reach to
rural areas
Use transaction history to support FIs credit
analysis
Bank / MFI
Agricultural
Credit /
Overdraft
Facility
Bank or MFI loan

products to
support costs of
farming (including
labor as well as
input costs)
Design credit products tailored for agriculture value

chain actors, delivered through digital channels
An overdraft credit product with a limit that can be
withdrawn and repaid within a span of one year may
be suitable for digital channels. This may allow the
farmer to avail of funds when needed and repay
when sale of produce is done, and will help to
smooth cash flows
Develop bundled products, such as a credit with
insurance product or a savings-linked credit product

that will help in productivity enhancement, as well

as risk management
Input
financing
from dealers
and traders
Input dealers, crop

buyers, and
traders provide
loans for
production and
equipment.
Providing
advances is a
major part of the
trader model in
some value
chains.
Deliver input financing through digital channels

Use transaction history from input financing to
support FIs credit analysis
Link to information / agricultural extension services
to better understand input requirements
Bundle insurance with input financing
Equipment
leasing
Financial lease
(lease period
extends for the
equipments
useful life, with
the option to
purchase at the
end of the lease
period); operating
lease (does not
extend for the
equipments
useful life)
Leverage digital channels for lease payments

Develop automated customer databases and
dashboards for accounts
Provide information services on what equipment is
available for lease and how to lease
Insurance:
weather
index and
equipment
insurance
Reduces financial
risk for providers
of agricultural
credit
Manage policies and payouts through digital

channels
Establish a claims portal where on-site inspections
are registered and payout is triggered, which is
communicated through mobile channels
Develop an SMS channel / app for policy holders
for transactions and communications
Financing
for energy
solutions
Financing for low- Develop a pay-as-you-use product for solar panels

and solar pumps that farmers can use to connect to
income segments
electricity and for irrigation
for off-grid energy
solutions

Potential points of interaction between farmers, upper value chain actors (namely traders and
millers), and financial institutions, MNOs, and payment services providers with DFS as well
as a few of the key benefits that DFS would present for these actors are illustrated below.
RECOMMENDATIONS TO PROMOTE DFS ECOSYSTEM DEVELOPMENT

DFS in Myanmar is still in the incubation stage and providers have yet to gain a foothold in a
space that offers much potential to support the agriculture sector and enhance financial
inclusion in the country. However, the industry risks stalling because of regulatory restrictions,
infrastructure deficiencies, and capacity limitations of authorized players. Improved strategies
and coordinated efforts of all stakeholders, including policy makers, DFS providers, and
development partners, are therefore needed to support the industry.
Specific recommendations to assist the growth of commercially-viable digital financial
services Myanmar are described below.

Create an Enabling Regulatory Environment

The mobile banking directives signal the governments intent to leverage DFS to expand
financial inclusion in Myanmar. Six DFS providers are already in the early launch stages
(Myanmar Mobile Money, MyKyat, LeoTech in partnership with CB Bank and MCC Group,
Ooredoo, Digital Money Myanmar, and Myanmar Payment Solution Services MPSS), and
other non-bank players eyeing the sector for possible entry include Boloro, Myanma Computer
Company (MCC), Yatanarpon eBilling Services, and Easy Pay Company.
Although these early initiatives are encouraging, the regulations as set-forth in the Mobile
Banking Directive limit the range of DFS actors to banks. As noted in Section E and F, however,
Myanmars financial sector is underdeveloped and the countrys banking system requires
substantial upgrading and investment to build capacity, automate processes, and update
technology systems, which are needed to manage DFS initiatives. Therefore, the CBM should
consider the benefits of opening the market to a wider spectrum of players that can provide
DFS, allowing for greater investment and innovation to facilitate the scale-up of DFS services
in Myanmar. Where the Central Bank has issued drafts of a new set of regulations that are
progressive and non-restrictive, issuance of the regulations has been delayed by more than a
year, which is causing anxiety for the aspiring players and has stalled many planned roll-outs.
Additional recommendations on specific regulatory considerations are included in Section F
above.
Support the Development of Robust Agent Networks
Convenient availability of cash-in, cash-out, and wallet registration points are key for
encouraging the transition to digital payments and building an ecosystem that can support DFS
in the country. Providers should look to recruit existing actors into a formal role, including
informal channels (e.g. Hundi actors of good standing), when developing their networks. As
described in Section E, rural merchants, retailers, wholesalers, and distributors also have the
potential of becoming agents. Using existing relationships will provide additional revenue
opportunities to actors, and delivering DFS services through structures familiar to the target
market will allow providers to leverage established networks to encourage uptake.
Providers should also consider sharing delivery channels and acceptance infrastructure
wherever possible to accelerate agent network scale-up, reduce roll-out costs, and keep
operational costs to a minimum. There is also a clear lack of know- how on how to develop
and manage agent networks. Donors can encourage innovative and collaborative agent network
models by:
Providing technical advice on emerging distribution models, including shared agent

networks and agent aggregators
Set-up an agent network development training facility for the DFS industry
Assisting the preparation of template business cases for joint investment

Providing technical assistance (technical integration, agent network management,

pricing models) and funding for development of such models
Develop Credit Assessment and Information Mechanisms

Banks and MFIs are typically cautious in lending to farmers due to lack of credit information
on borrowers, lack of collateral on the part of the borrower, and the high degree of perceived
risks associated with agriculture. This challenge is further exacerbated by the absence of
effective collateral and bankruptcy laws 38 , and the reluctance of banks to use farmland as
collateral despite the Central Bank of Myanmars permission.39
Traditional ways of assessing risk will be insufficient for Myanmars agricultural sector due to
limited assets possessed by farmers, incomplete land records, and the high degree of
information asymmetry. DFS can help to overcome this barrier by supporting the development
of alternative lending methods. In this context, DFS can be a powerful tool to generate data
that can be used by MFIs and banks to assess borrowers willingness and ability to pay and
underwrite risk.
In many markets, DFS providers are analyzing voice and financial transaction data, which is
then used to provide loans to customers (Kopo Kopo in Kenya is an example). In Myanmar,
donors and other stakeholders can play a key role in encouraging partnerships between MNOs,
MFIs, banks, data analytics companies, and other actors to promote the use of data analytics to
increase the flow of credit in a market with significant credit constraints in the agriculture
sector. Establishment of a credit information system that can assess a credit profile (e.g. credit
scoring) for a loan, monitor the loan once it is disbursed, and collect data on DFS transactions
in the agriculture sector would be instrumental for Myanmars MFIs and cooperatives in
increasing supply of credit to rural areas.
To achieve the above, however, MFIs must have strong back-end technology systems that can
be integrated with DFS providers and credit information systems, which are currently lacking
for most MFIs in Myanmar (most of the MFIs interviewed for this assessment still use Excel
for back-end calculations).
Donors can assist the creation of alternative credit assessment mechanisms and lending models
by:
Expanding farmers associations and cooperatives to support group-lending and
other methodologies
Establishing a credit guarantee scheme to stimulate lending by financial institutions
to small farmers and lower-income segments
38
39
http://www.doingbusiness.org/data/exploreeconomies/myanmar/getting-credit
http://www.mmtimes.com/index.php/business/15309-banks-unwilling-to-take-farmland-as-collateral.html
Promote the establishment of an open national credit bureau, which allows for the
collection and dissemination of financial system information and the participation
of microfinance institutions and other commercial entities
Assist MFIs with updating their back-end technology, including consideration of a
single platform that could be developed and accessed by multiple institutions, to
accelerate the capacity of MFIs to deploy DFS for their customers
Develop Insurance Indexes and Monitoring Techniques

Insurance not only helps farmers cope with shocks, but also aids in the provision of finance by
reducing their risk profile. The development of appropriate insurance products for Myanmars
farmers will require not only risk assessment and management skills on the part of financial
institutions and insurance providers, but also the development of sophisticated insurance
indexes, monitoring techniques, indemnity triggers, and thresholds. These might be too costly
and unfeasible for providers to deploy alone; however, donors could assist in the development
of insurance products and infrastructure. Specifically, assistance can be provided in the
following areas:
Application of actuarial methods for modelling of risks and losses

Re-insurance in the international market
Building capacity of insurance providers for assessment of actual losses
Development of robust real-time measurement tools, such as weather stations and
remote-sensing through satellites
Develop a Business Model for Pay-As-You-Go Products to Finance Energy Access

Considering the infrastructure challenges in Myanmar, there is a large market for solarpowered solutions to bring access to clean energy to off-grid areas throughout the country. To
make these energy solutions available to rural and agricultural segments, however, financing
and distribution models must be created which are tailored to the needs of these lower-income
groups. Pay-as-you-go financing, delivered through digital channels, would enable access to
clean energy paid through small, user-defined payment increments that reflect the economic
constraints faced by lower-income populations. Activities to support development of pay-asyou-go business models for clean energy include:
Conduct an in-depth feasibility study on the demand for alternative energy products
Develop a pilot in partnership with a solar panel company and a financial services
provider
Develop a detailed case study for dissemination to the industry

CONCLUSION
As Myanmar continues on its path towards greater economic and social development, growth
of the agriculture sector and increased rural incomes remain critical conditions for
achievement of stated development objectives. While there is significant potential for
improved productivity in the agriculture sector, tapping into this potential requires concerted
efforts to promote greater financial inclusion in Myanmars rural areas. DFS is key to
expanding access to formal financial services in Myanmar, leveraging technology to support
the creation of business models that allow expanded, sustainable outreach to rural and
agricultural segments. Industry stakeholders, including the Government of Myanmar, private
sector players, donors, and implementing partners, play an important role in further
developing DFS. However, coordination among stakeholders is required to implement the
recommendations in this report, as well as to continue dialogue on additional ways in which
stakeholders could work towards their respective goals. These coordinated efforts could
result in great impact, not only promoting broad-based growth that improves incomes,
livelihoods, and living standards at a rural household level, but also contributing to the
economic transformation of Myanmar as a whole.

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Annex 1 | Assessment Objectives and Methodology

This study builds on recent research conducted by organizations including USAID, LIFT,
UNCDF, CGAP, Proximity Designs, and others, which have contributed substantially to an
understanding of agriculture value chains in Myanmar, rural economies and livelihoods, and
use of / need for financial products. The objective of this report is to advance the understanding
of: 1) the payment flows and payment service providers in agriculture value chains; 2) the
potential for DFS to enhance the efficiency of transactions within the value chains, thereby
contributing to improved livelihoods; and 3) value chain actors familiarity with and openness
to mobile-based payment options.
To this end, key project activities and assessment methodology included:
Desk study: The focus of the desk study was to develop an understanding of: 1)
relevant trends and characteristics of Myanmar, including (but not limited to)
demographics, macroeconomic conditions, and key actors (from the public sector and
private sector, particularly those involved in agriculture and financial services); 2)
Myanmars agriculture sector, including key crops, crop cycles, production practices,
value chain structures, and leading actors; and 3) financial services landscape, including
the regulatory framework, current state of financial inclusion and telecommunications
coverage, and existing or planned deployments of alternative delivery channels,
electronic payments (e-payments), and mobile money.
Stakeholder interviews: Stakeholder interviews were conducted to further

contextualize and deepen an understanding of the information gathered during the desk
study. A complete list of stakeholders conducted can be found in 0.
Rapid value chain assessment and selection: Based on the desk study and stakeholder
interviews, a rapid value chain assessment was conducted to select the value chains,
which would comprise the focus of this study. The selection of the value chains
considered the following criteria: relevance to the economic activity within Myanmars
agriculture sector; degree to which the value chains have well-defined and accepted
structures (to enable a more effective study of transaction flows within the chain); and
geographic centers of production, with a preference for commodities produced in
locations with stronger infrastructure to support DFS initiatives. A summary of the
value chain assessment is included in 0.
In-field assessment: The in-field assessment was conducted through focus groups
discussions (FGD) with 164 producers (farmers) in all four value chains, as well as
through 53 key informant interviews (KII) with both rural and urban upper-value chain
actors. Three assessment tools were developed and applied during the FGDs and KIIs
with the objective of confirming the structure of the value chain, ascertaining the roles
of the different actors within the chain, and obtaining insights on the relationships and
transactions that enable the value chains to function, financial services needs and
preferences, and openness to / familiarity with digital financial services.
Key informant interviews with rural actors: 22 interviews were conducted with rural
actors in the value chains, including as millers, traders and input dealers. These KIIs
explored the role of these actors and how their business was conducted.
Key informant interviews with upper value chain actors: 31 interviews were
conducted with urban-based value chain stakeholders, supported by 15 further
interviews with organizations representing the interests of value chain actors
(federations and associations).
Farmer focus groups: 20 FGDs involving 164 participants were conducted,
segmented by different farm sizes. These groups are representative of the agricultural
economy in the area and contained 8-10 farmers per FGD. Of the FGD respondents,
19.5 percent of the sample were women, and 80.5 were men. The sessions were framed
around the journey through the agricultural season, describing the inputs required at
each stage, exploring constraints experienced, and how business was conducted.
The FGDs and KIIs were conducted in April May 2015 by Myanmar Marketing Research
and Development Co. Ltd. (MMRD). A map highlighting the location of all FGDs and KIIs
conducted during this study is included in 0.
A breakdown of the FGD sample by gender and value chain is included in Figure 13.
Figure 13: Value Chain Distribution by Gender (As a % of Total Gender)

Annex 2 | List of Stakeholders Consulted

Stakeholder consultations were conducted between January 27 and February 6, 2015. The
mission comprised of meetings with donors, implementing partners, financial institutions,
mobile network operators, financial service providers, and agricultural associations. A list of
stakeholders consulted is included below.
DONORS
UNCDF
IFC
LIFT
GIZ
GSMA mAgri
IMPLEMENTING PARTNERS
PACT NGO
Winrock International
International Fertilizer Development Corporation
Michigan State University
FINANCIAL INSTITUTIONS
CB Bank
Pact Global Microfinance Fund
Proximity Finance
World Vision
Myanmar Citizens Bank Limited
MOBILE NETWORK OPERATORS
Ooredoo
Telenor
FINANCIAL SERVICE PROVIDERS
Visa
Red Dot
Frontier Technology Partners - myKyat
Myanmar Mobile Money
AGRICULTURAL ASSOCIATIONS
Myanmar Pulses and Beans Merchants Association

Annex 3 | Summary of Rapid Value Chain Assessment

To select the four value chains that would comprise the focus of this study, eleven major value
chains were assessed. A summary of the analysis is presented in the below. During the desk
research phase of the project, all eleven chains were identified as being significant to the agriculture
of Myanmar, either as a cash crop, export, or national markets (using data from the Food and
Agriculture Organization). Sufficient information was obtained only for the rice value chain prior
to the first trip by the Consulting Team to Myanmar. However, during meetings with key
stakeholders in the agriculture sector, the Team obtained access to additional research, much of
which had not yet been published, which helped to fill knowledge gaps on pulses and oil seeds.
Although some information was obtained on the aquaculture and horticulture sectors, the level of
detail was not the same as the information received on other value chains.
Value Chain
(VC)
Aquaculture
Black Gram
Chickpeas
Coffee
Green Gram
Understanding
of VC
Low
Domestic
market
High
Partnerships
Growth
Potential
Study
Areas
Low
Rapidly
growing,
mainly in
the Delta
and
riverine
MSU, WFC,
MFF,
University of
Arizona
Very
High
Delta
MSU,
MPBSA,
Medium
to high
Delta
Export
Market
Scale
High
Low
High
Delta and
to a lesser
extent,
Irrawaddy
Valley
Medium
Low
High
Dry zone
MSU,
MPBSA,
Medium
to high
Dry Zone
Medium
Limited to
highlands,
particularly
Shan
Winrock
Stable
Shan
State
High
Irrawaddy
Valley and
to a lesser
extent,
Delta
MSU,
MPBSA,
Medium
to high
Dry Zone
Low
High
Low
Low

Maize
Medium
High
Medium
Limited to
highlands,
particularly
Shan
Potato
Low
High
Medium
Taunggyi
Winrock
Low
Throughou
t the
country
IRI, IFDC,
MSU, MRF
Low
Costal,
Delta,
Dry Zone
High
Dry Zone
& South
Shan
MSU,
MPBSA,
Winrock
Medium
Dry Zone
Medium
Shan or
Kachin
States
High
Shan,
Sagaing,
Magway,
Bago
Rice
Sesame
Soya
Vegetables
High
High
Medium
Low
High
Medium
Medium
High
Medium
Limited to
highlands,
particularly
Shan
Medium
Predomina
ntly upland
or irrigated
valley
Winrock
High
South
Shan
High
Shan
State
Winrock
Winrock,
MHA

Annex 4 | Locations of FGDs and KIIs

Annex 5 | Additional Details on Agriculture Sector in

Myanmar
OWNERSHIP OF LAND
Although the average size of land ownership varies between regions and studies, the figure is
consistently less than five acres. The Household Survey 2013 cites the average size of land
owned as 3.8 acres in the Dry Zone and 4.5 acres in the Delta, 40 while a recent World Bank
study reported the average land holding for rice, oil seeds, and pulses to be between 4 5
acres.41 Access to land is highly skewed, however; landless households constitute between 25
50 percent of rural households, with significant regional disparities. In the Delta, 50 80
percent of rural households are landless, while this figure stands at 25 45 percent in the Dry
Zone.42 Since much of the agricultural production system is un-mechanized, draught animals
work the land and transport crop, with landless households providing much of the seasonal
labor to plant and harvest crops.
INPUT SUPPLY
Low application rates of nutrients are responsible for stagnation and decline of agricultural
productivity in Myanmars agriculture sector. 43 Nitrogen, phosphate, zinc, and sulfur
deficiencies are experienced in all the major rice production zones. Domestic production of
urea, the most widely used fertilizer, is placed at between 4,000 10,000 tons per year,44 which
is far below the demand. The removal of subsidies in 2002 marked the end of government
involvement in the importation and distribution of fertilizers, which has led to substantial
increases in the price and a decline in their use. Since 2002, fertilizer prices have been largely
determined by exchange rates, which has led to large inter-seasonal variation in fertilizer prices.
Issues including poor quality, importation of banned products, poor labeling leading to
inappropriate use, and shortage of supply have been reoccurring themes fertilizers and other
agricultural inputs. Cross-border trade with China has addressed some of the input supply
shortages and significantly contributes to meeting fertilizer demand. However, this crossborder trade from China is not well-recorded and therefore makes definitive insights in terms
of type and volume of inputs difficult to obtain. Recognizing these concerns, the Government
of Myanmar has made recent efforts to strengthen regulation enforcement through the fertilizer
law.
Official statistics put nutrient applications at 5 kilograms / hectare (kg / ha). Although
household surveys place the figure closer to 100 kg, this number is still low when compared
40
LIFT, 2013, p. 81
World Bank, 2013, p. 13
42 Haggblade, 2013, p. 5 p.25
43 Lwin H. Y., 2014
44 Lwin H. Y., 2014
41

regionally (China 432.1 kg, India 156.2 kg, Vietnam 262.4 kg).45 The gap is being filled
with lower-priced and more efficient supply chains from China. For example, urea imported
through the port of Yangon retails for USD 35 per 50 kg bag, whereas urea imported overland
through China retails for USD 23 per 50 kg bag.46
Figure 14: Schematic of the fertilizer supply chains in Myanmar
Domestic
Production
Import overland
from China
Import via deep

sea port
Buying permit issued by

the Myanmar
Petrochemical Enterprise
(MOE) headquarters,
allocated to local
government
Approval from the

Ministry of Agriculture
and import permit form
the Ministry of
Commerce
Local Trader
Farmers, do not
know how to
access the system
254 Companies are

approved to import
Largest are:
Diamond Star,
Golden Lion,
Myanma Awba
Wholsalers
Retailers
Farmers
Wholesalers and local level retailers have limited finance options, which constrains the amount
and range of agricultural inputs they are able to supply. Inefficient supply chains and high
transport costs combine to make unit costs high to the farmer. Farmers frequently take inputs
on credit from retailers with interest rates of approximately 5 percent per month. This situation
has led to farmers applying far below the recommend rates of fertilizer to replace soil nutrition,
which has depressed yields and reduced soil fertility.
Import volumes of fertilizer have been highly erratic and do not show consistent trends (Figure
15). The private sector has played an important role in increasing the supply (Figure 16) and
range of fertilizer products available. Input suppliers are also involved in the training and
dissemination of information on crop protection, as well as on the safe and effective use of
inputs, through meetings and demonstrations, delivered through their networks of distributors.
Awba employs agronomists and has a network of over 1,000 dealers supporting many retail
outlets to extend the penetration of products rurally. Large importers repackage inputs into
retail packaging and have the ability to blend fertilizers for a wide range of uses.
45
46
Lwin H. Y., 2014

Lwin H. Y., 2014

Fertilizer MT ('000's)
200
150
100
50
0
2004
2005
2006
2007
2008
2009
Domestic Urea production

Figure 15: Trends in Urea production and Fertilizer import in Myanmar 2005-2010 (Lwin H. Y.) (FAO STAT, 2015)
Fertilizer MT ('000's)
200
150
100
50
0
2004
2005
2006
Governmental Distribution
2007
2008
Private sector distribution
2009
Figure 16: Role of Governmental and Private Sector Distributors in Myanmar fertilizer supply (Lwin H. Y.)
Actors in the input supply chain are broadly the same for all the value chains in this study, as
outlined below.
1. Urea Manufactures in Myanmar
a. Five factories, of which three are operational
b. Production varies from between 4-10,000MT p.a. due to the reliance on natural
gas used in the production process, which is imported
2. Importers (overland and sea freight)
a. 254 companies are licensed to import fertilizers: Diamond Star, Golden Lion,
and Myanmar Awba are the largest
b. Import overland from China through Muse (mainly urea and compound
fertilizers)
c. Import through port of Yangon (mainly T-super, Potash, and Compound,
originating from Vietnam, Thailand and Germany)
d. Re-pack products into retail packages and mix fertilizers for specific uses
3. Traders in Mandalay handle overland imports from China through Muse

a. Imports are usually already retail-packed on arrival, leading to labelling not in
Burmese language
b. Sell-on to wholesalers retailers and distributors
4. Ministry of Agriculture
a. Distribute fertilizers from domestic urea production factories
b. Supply state-owned enterprises operated under the Ministry of Agriculture and
Irrigation
5. Wholesalers
a. Buy stock from importers, traders, and manufacturers in large volumes
b. Distribute to retailers
6. Retailers
a. Operate a wide-range of stores, from very small, village-level stores selling a
limited range of products in small volumes, to larger stores, which are located
in trading centers and can be distributors for the major input dealers
b. Extend credit on a short-term basis (2-3 months), which is an important part of
the retailers business model
7. Farmers
a. The majority of farmers obtain inputs on credit either from the store (5% per
calendar month) or from a trader in the form of an advance or loan against the
crop
b. This informal credit is repaid either with crop or cash from crop sales
COMMODITY EXCHANGES
Commodity Exchange Centers (CEXC) are where the majority of pulses and oil seeds are
traded. As such, they play a highly influential role in the functioning of these value chains.
There are seven (CEXC) in Myanmar, all of which are located close to centers of production
and are membership driven, meaning that only members are allowed to conduct business at the
centers.47 Mandalay is main CEXC and leads the price as it is the first CEXC to open daily.
Members display samples, allowing buyers to negotiate prices. Mandalay and Yangon are the
key terminal markets for export commodities to China via Mandalay and shipping through port
of Yangon to other markets. As such, there is a hierarchy from rural traders through regional
CEXCs onto terminal markets handling large volumes and which are closely integrated with
exporters. Once agreed, the consignment is checked and the transaction recorded on a
blackboard on the floor of the exchange. A daily trading report detailing prices is printed and
is now also publicized in newspapers and online, enabling interested parties to look it up.
Farmers are able to obtain market information by contacting their collector, trader, or broker,
who is in close contact with the CEXC.
47
Favre, 2009, p. 121

Commodity Exchanges in Myanmar including membership and date of establishment. (Favre, 2009, p. 124)
CEXC
Established
Membership (2012)
Yangon
1994
3,670
Mandalay
1935
1,980
Monywa
1970
720
Magwe
1990
528
Myingyan
2007
500
Pakkoku
1989
430
Taunggi
2007
300
Annex 6 | Additional Details on the Rice Value Chain

PADDY PRODUCTION CALENDAR
Paddy production has been steadily increasing from 20.1 million tons in 2000 to 29 million
tons in 2012. Meanwhile, rice consumption in Myanmar is around 10 million MT per annum.
The crop production calendar for paddy / rice is illustrated in Table 7.
Table 7: Paddy production calendar in lower Myanmar for wet and dry seasons
May Jun
Jul
Aug Sept Oct
Nov
Dec
Jan
Feb Mar Apr
Monsoon Season
Wet Season Paddy
Lower Myanmar
(83%)
Sowing
Growing
Harvesting &
Marketing
Dry Season Paddy
Lower Myanmar
(17%)
Sowing
Growing
Harvesting &
Marketing

In 2012, 83 percent of paddy was planted in May September with monsoon rains, termed
monsoon or wet season paddy, and a further 17 percent of dry season or summer paddy
was planted in the dry summer months of October November. Dry season paddy is only
possible with irrigation, so is limited to certain areas.
High-yielding varieties are the first to be marketed beginning in October and continuing
through January, with slow-maturing varieties marketed later in the season. Summer paddy
harvesting commences in February and ends in April. If irrigation is available, two rice crops
can be grown in the Delta. If irrigation is not available, many farmers elect to plant an
alternative succession crop (usually green gram or black gram) immediately after rice is
harvested, grown with the residual soil moisture.
TRANSACTION DETAILS
374,226,357
Miller
Farmer
1,861,091
Rural
Broker/
Trader &
Collector
Farmer
16,749,821 3,368,037,217
Miller
Rural Broker/ 16,749,821 3,469,078,333

Trader &
Collector
12
38,628
Urban
Trader &
Wholesaler
Miller
10,645,442 4,421,952,691
12
5 Exporter
Miller
1,451,651
12
602,993,549
214,600
858,400
Payment
method
Average
transaction
size
Average
volume per
transaction
MT
# of actors
receiving
payments
Payment
Frequency
Value of
transaction
US$
Volume of
transaction
MT
Recipient
Origin
# of
transactions
Transaction details between each value chain actor, including the volume and value of
transactions, payment frequency, number of actors receiving payments, number of transactions,
average transaction size, and payment method are presented in the table below. These figures
correspond to the transaction mapping diagram in Figure 9.
2.17
436
Cash
8.67
1,744
Cash
463,536
36.13
7,484
Cash
12,876
154,512
68.90
28,619
Cash/
Bank
Transfer
250
3,000
483.88
200,998
Cash/
Bank
Transfer
1,931,400 1,931,400

DESCRIPTION OF VALUE CHAIN ACTORS

The actors involved in the rice value chain are described as follows:
Farmers
o An estimated 2.15 million households grow rice in Myanmar.
o Farmers are not organized into groups or collectives.
o 60 percent of the paddy produced is on landholdings smaller than 10 acres. This
corresponds to 86 percent of all households growing rice.
o Credit is supplied to the monsoon crop by the MADB (MMK 100,000 per acre
for a maximum amount of 10 acres), which is guaranteed by groups.
o Additional credit is often required and obtained from input dealers, traders,
and/or friends and family.
Collectors of paddy (rural traders / brokers / middle men)

o Collectors of paddy act as small-scale traders, buying rice paddy from farmers
and supplying mainly to larger rice mills.
o This type of buying takes un-hulled rice (paddy) off-farm and enables proper
storage and drying.
o Collectors are often employed or act on behalf of millers.
o Commonly, they aggregate small consignments from a number of farmers.
o Where logistic costs are high, this type of player is more prevalent, as collectors
absorb logistics costs into margins, thereby providing market access.
Millers
o Millers take dried paddy and mill it into rice.
o Mill sizes range from smaller, village-based mills focusing on small
consignments to larger mills in trading centers, which process larger
consignments aggregated from traders / collectors.
o Millers have a wide-range of potential avenues for their rice, differentiated by
location and volume, including urban-based traders, wholesale markets, and
exporters.
o Paddy is milled by an extensive network of over 16,000 rice mills. However,
only 1,200 have the capacity to handle over 50 MT per day, indicating that the
majority of mills are small enterprises servicing the immediate locality.
Urban traders
o Urban traders are active in the major markets and handle much larger volumes
of rice than rural traders.
o They manage networks of 40 50 smaller traders or mills.
o Much of the rice is destined for the domestic market in rice deficit regions.
Wholesalers
o Located in major markets, wholesalers buy rice from traders and store / handle
product for a range of end markets, including retail, export, and rice deficit areas
within Myanmar.

o Wholesalers operate storage facilities and keep a wide-range of rice products in

stock.
Exporters
o Exporters represent under five percent of the rice trade in Myanmar.
o Exporting requires conformity of quality, and rice from Myanmar often fails to
meet these standards; due to post harvest issues (old milling equipment and wet
paddy), Myanmar has a large proportion of broken rice.
o There are two main export markets: overland to China and Thailand and
international exports through the port at Yangon.
Retail stores
End consumers
40
30
1.5
20
10
0.5
Yield Ton/Acre
Million Acres / Tons
TRENDS IN RICE PRODUCTION AND EXPORT
0
1990-91
1995-96
Sown Area (million acres)
Rice Export (million tons)
Milled Production Million MT
2000-01
2005-06
2010-11
Paddy Production (million tons)
Milled Rice (conversion of 65%)
Yield (Ton/acre)
Source: Wong, 2013, p. 8
COMPARISON OF RICE PADDY YIELDS BETWEEN MYANMAR AND WORLD

AVERAGE, WITH YIELD GAP
1.9
1.76
Yield MT/Ha
1.5
1.47
1.43
1.53
1.61
1.73
1.61
1.9
1.7
1.5
1.3
0.98
1.1
0.83
0.9
Yield Gap MT/Ha
0.7
0.5
2003
2004
2005
yield gap
2006
2007
2008
2009
2010
Myanmar Yield (Rough) (MT/HA)
2011
2012
2013
World Yield (Avg)
Source: Wong, 2013, p. 11

Annex 7 | Additional Details on Sesame Value Chain

Sesame in Myanmar has seen increases in cropping area in the country, as well as the yield per
unit area, which is in-line with or surpasses other origins (see graph below).48 The growth of
sector has been sustained by this expansion of the land area under crop, with annual growth of
17 percent per annum in the 1990s.49
TENDS IN THE AREA PLANTED (MILLION HA), PRODUCTION (MILLION
TONS) AND YIELD OF SESAME IN MYANMAR 2000-2013
Source: FAO STAT, 2015
48
49

Steven Haggblade, 2014, p. 5

SESAME PRODUCTION CALENDAR

The crop production calendar for sesame is illustrated in the table below.
Jan
Feb
Mar Apr
May Jun July Aug Sep
Oct
Nov Dec
Crop 1 Pre-Monsoon
Sesame (7%)
Pre-season
Land preparation and
planting
In season management
Harvest and Marketing
Crop 2 Monsoon
Sesame (80%)
Pre-season
planting
Crop
3
Winter
Sesame (13%)
Pre-season
planting
Sesame is grown during both the monsoon and cool seasons in the Dry Zone. Sesame that is
planted in the pre-monsoon period of the season has the highest gross margin (USD 443/ha);50
however, since it is irrigated, only 7 percent of the land cultivated for sesame utilizes this
production system. The majority (80 percent) of sesame is grown during the monsoon season
and has the lowest gross margin. Winter sesame has more attractive margins than the monsoon
crop, but is only grown on 13 percent of the total cultivated area.51 Winter planting is less
popular due to increased risk of crop failure, and competition with other crops such as green
gram which show higher returns.
50
51
Favre, 2009, p. 80
Favre, 2009, p. 80

TRANSACTION DETAILS
average transaction size, and payment method is presented in the table below. These figures
Volume Value of
# of actors
Average
Payment
# of
Payment
Recipient in Chain transaction
receiving
transaction
frequency
transactions
method
(MT)
(USD)
payments
size (USD)
Origin
Oil Miller
Farmer
27,502
11,164,739
64,632
64,632
173
Cash
Broker/
Trader/
Rural
Collector
Farmer
495,037 200,965,303
1,163,370
1,163,370
173
Cash
Exporter
Farmer
27,502
11,164,739
64,632
64,632
173
Cash /
Contract
Farming
Oil Miller
Broker/
Trader/
Rural
Collector
192,514 88,880,079
20
3,600
72,000
1,234
Cash
Livestock/
5 Fish Farmer Oil Miller
(Cake)
88,007
4,735,636
12
720
8,640
548
Cash
Commodity
Exchange
6
Oil Miller
Trader
(Cake)
27,502
1,479,886
720
4,320
343
Cash / Bank
Transfer
Commodity
Exchange Oil Miller
Trader (Oil)
59,404
39,247,341
12
720
8,640
4,543
Cash / Bank
Transfer
8 Retailer (Oil) Oil Miller
39,603
26,164,894
12
250
3,000
8,722
Cash / Bank
Transfer
Commodity
9 Exchange
Trader
Broker/
Trader/
Rural
Collector
272,270 125,701,827
10
7,500
75,000
1,676
Cash
10
Exporter
Broker/
Trader/
Rural
Collector
30,252
13,966,870
500
3,000
4,656
Cash
11
Snack
Industry
Commodity
Exchange
Trader
53,476
38,310,379
52
150
7,800
4,912
Bank
Transfer
12
Exporter
Commodity
Exchange 123,429 88,424,733
Trader
26
150
3,900
22,673
Bank
Transfer


The participants involved in the sesame value chain are described as follows:
1. Farmers
a. There are 1.3 million sesame farmers in Myanmar and 3.9 million acres of land
cultivated for sesame.
b. On average, each farmer cultivates 3 acres of land.
2. Primary collectors (traders, brokers rural)
a. Primary collectors procure directly from farmers at the farm gate and bare all
the costs of marketing.
b. They sometimes provide credit.
c. Collectors pay farmers after delivery and sale.
d. Collectors sell directly to millers or traders / brokers in urban markets, but are
also known to supply wholesalers.
e. They earn a margin of approximately 5 7 percent.52
3. Oil millers
a. Oil millers buy from farmers, primary collectors, and wholesalers.
b. They sell oil and seed cake to a range of actors.
4. Urban-based traders / brokers / commissioning agents and wholesalers based around
commodity exchanges centers (CEXC) (see Annex 5 for more information on CEXCs)
a. Commissioning agents buy and sell on a pre-agreed commission (usually 1 2
percent).53
b. These actors facilitate transaction completion and work for a number of actors
higher in the value chain.
c. Wholesalers purchase seed from primary collectors, and in many cases, also buy
oil and press cake from millers.
d. Wholesalers often employ primary collectors.
e. Wholesalers commonly act on behalf of an exporter or as a large-scale
commissioning agent.
5. Exporter and export traders
a. Exporters and export traders buy from commodity exchanges and rural traders.
b. Some are specialized in niche products for particular markets (e.g. black sesame
for Japan).
c. Traceability for sesame exports is increasingly important, particularly for
higher-value markets.
6. Livestock and pond owners
a. Livestock and pond owners buy directly from oil millers for their livestock and
fish feed needs.
b. They may also buy from commodity exchanges if the pressing of sesame into
the cake by-product takes place a far distance from the livestock or pond owners
operations.
52
53
Favre, 2009
Favre, 2009

7. Oil retailers
a. Small-scale and regional oil retailers buy directly from millers.
b. Urban and larger retailers commonly buy from commodity exchange traders.
8. Snack industry
a. Sesame seed is used in a wide-range of cooking and confectionary products.
b. Although there are small scale operators, the larger manufacturers buy from
commodity exchanges.
Within this value chain structure, there are six marketing pathways for oil seed to reach market
(the prevalence of each pathway varies geographically):54
1. Producers to primary collectors, who in turn sell directly or indirectly through
wholesalers or commission agents
2. Producers to commission agents / brokers to millers, either directly or through
wholesalers or CEXCs
3. Producers to millers directly
4. Producers to commission agents/brokers to export traders, either directly or through
wholesalers or CEXCs
5. Producers to export traders under a contract farming agreement
6. Exporters through backward integration of sesame production for export to
international markets
54
Favre, 2009; confirmed by the studys in-field research

Annex 8 | Additional Details on the Pulses Value Chain

PULSES CROP CALENDAR
The crop calendar for pulses (specifically green gram) is illustrated below.
Post-Rice
Green Gram
(Lower
Myanmar /
Delta)
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
t
Oct
Nov
Dec
Monsoon Rice
Season
Pre-season
Land
preparation and
planting
In season
management
Harvest and
Marketing
Monsoon
Green Gram
(Central)
Pre-season
Land
preparation and
planting
In season
management
Harvest and
Marketing
Chickpea (Dry
Zone)
Pre-season
Land
preparation and
planting
In season
management
Harvest and
Marketing

TRANSACTION DETAILS
Average
total
business for
season
Average
purchase
volume
Averageper
tx
tx in
MT
size
# of actors
receiving
payments
Payment
Frequency
Rural Trader
& Wholesaler
Farmer
249,975 141,985,800
148,089 148,089
959
1.69
959
Cash
Commodity
Exchange
Trader (in
regions)
Farmer
83,325
47,328,600
49,363
49,363
959
1.69
959
Cash
Commodity
Rural Trader
Exchange
&
249,975 151,924,806
Trader (in
Wholesaler
regions)
10,000
66,880
15,192 6.25 3,798
Cash
Commodity
Exchange
33,330
Trader (in
regions)
22,079,738
12
200
2,160
110,399 13.89 9,200
Cash /
Bank
Transfer
Trader /
Exporter at Commodity
Terminal
Exchange
299,970 198,717,646
Exchange
Trader (in
(Yangon /
regions)
Mandalay)
800
2,508
248,397 31.25 20,700
Bank
Transfer
12
30
1,200
79,487 8.33 6,624
Cash /
Bank
Transfer
Retailer
Animal Feed
Manufacturers
Exporter
3,000
2,384,612
Payment
method
# of tx
Recipient
Value of tx
Origin
Volume in
Chain
(MT)
average transaction size, and payment method are presented in the table below. These figures

The actors involved in the green gram value chain are described below.
1. Farmers
a. 277,000 farmers grow, on average, three acre plots, mainly after rice but
sometimes with the monsoon rains in Central Myanmar.
b. To retain quality and value, farmers store crop at a warehouse owned by traders.
2. Rural traders or wholesalers
a. Rural traders or wholesalers often have a strong personal, family, and/or
economic relationship with farmers developed over many seasons.
b. All payments are in cash to the farmer.

c. Many traders or wholesalers will store the crop for farmers to ensure the
retention of quality.
d. Storing crop also means that traders have stock ready for sale at attractive points
in the season.
e. Rural traders will sell to rural wholesalers or traders based at commodity
exchanges.
f. Close to Yangon, wholesalers often sell directly to a Yangon trader, rather than
via a commodity exchange.
3. Regional commodity exchanges
a. Regional commodity exchanges are made up of trading members who buy from
rural traders and wholesalers.
b. They are located in Hintada, Danubyu and Pyay and trade on a daily basis with
Yangon.
4. Yangon Commodity Exchange
a. Members of the Yangon Commodity Exchange can be wholesalers, exporters
or traders.
b. Many often have permanent representatives in the regional commodity
exchanges.
c. Exporters operating at this market mainly ship to India through the port of
Yangon.
d. 100 large export traders are based in Yangon
e. 30 companies have equipment for the sorting of size and color, which is required
to prepare for export.
f. Broken pieces are sold to animal feed manufacturers.
g. A small number of exporters specialize in high quality and specification exports,
mainly to Europe, which also requires traceability.
5. Feed manufacturers
a. Feed manufacturers buy rejected produce from companies, which sort produce
when preparing goods for export.

COMPARISON OF PULSE EXPORTS FROM MYANMAR, 2012-13
Source: International Trade Centre, 2014, p. 1
EXPORT VOLUME, VALUE IN USD AND PRICE PER TON

Pulse
Volume 000 tons
Value (USD)
Price (USD/ton)
Black Gram
658
382
581
Green Gram
303
240
795
Pigeon Pea
296
170
575
Chickpea
47
34
733
Cowpea
43
37
868
Others
73
50
685
1420
913
643
Total Pulses
Source: Steven Haggblade, 2014

BEANS, DRY AREA HARVESTED, PRODUCTION, YIELD
Area Harvested (Ha), Production (MT), and Yield MT/Ha of Beans, Dry from Myanmar 1990-2013
Source: FAO STAT, 2015

Annex 9 | Additional Details on the Aquaculture Value

Chain
Until the recent development of widespread pond aquaculture, the prevailing perception held
by experts was that Myanmar was dominated by large fisheries (which can reach up to 7,000
acres) with low productivity, though recent research is revealing new insights into the
composition of producers in the sector.55 Recent satellite imagery analysis has identified over
100,000 small-scale fish ponds, which provide household nutrition and nurseries to service
larger operations (see image below). The recent mapping exercise reveals a total of 226,954
acres of fish ponds in the area west of Yangon.56 The increase in small-scale ponds is a recent
development over the past decade, as ponds originally dug for fresh water supply have been
stocked with hatchery seed for household consumption. Land has also been converted from
rice paddy and wetland into aquaculture ponds due to more attractive margins. Dwindling
supply of fish from inland capture fisheries has been an important driver in this process.
Source: Belton, 2015
55
56
MDRI/MSU, 2015
Belton, 2015

TRANSACTION DETAILS
Payment
Frequency
# of Actors
Receiving
Payments
Number of Tx
Average
Purchase
Volume per
Transaction
in MT
Average
Transaction
Size
Payment
Method
Rural Fish
Trader
Pond
owner
90,782 12,237,630
600
1800
50.43
6,799
Cash
San Pya
market
trader/
broker
Pond
Owner
363,126 48,949,439
2440
7320
49.61
6,687
Cash
Exporter/
3
Cold
Storage
Pond
Owner
17,022
2,294,505
100
300
56.74
7,648
Cash
San Pya
market
trader/
broker
Rural
Fish
Trader
90,782 13,093,975
1000
6000
15.13
2,182
Cash
San Pya
Regional market
5
Distributor trader/
broker
85,108 14,116,942
52
500
26000
3.27
543
Bank
Transfer
5,674
100
500
11.35
1,882
Bank
Transfer
Exporter/
6
Cold
Storage
San Pya
market
trader/
broker
Value of Tx
Recipient
Volume in
Chain (MT)
Origin
average transaction size, and payment method are presented in the table below. These numbers
941,129

The participants involved in the aquaculture value chain on the buyer side are described as
follows:
1. Pond owners
a. Pond owners vary greatly in size, as follows:
i. 10-15 very large pond owners operate 500-7,000 acres often vertically
integrated, internalizing feed and nursery operations.

ii. Large farms range from 100 to 500 acres.

iii. Small and medium farms range from 5 to 50 acres.
2. Rural fish traders
a. Rural fish traders buy from smaller pond owners and organize the sale to market.
b. They also coordinate transport.
3. Wholesalers / brokers at the San Paya market in Yangon
a. There are 310 wholesalers / brokers at the market, turning over large volumes.
b. There are close financial linkages between these wholesalers / brokers and pond
owners, who borrow money for feed.
c. Wholesalers / brokers mainly sell to regional distributors across the country.
4. Exporters / Cold Storage
a. There are 160 cold store operators.
5. Regional Distributors
a. Regional distributors distribute to 25 destinations in major regional cities across
the country
This has been enabled by improved infrastructure and relaxing controls on the
transportation of goods.
The participants involved in the aquaculture value chain on the supplier side are described as
follows:
1. Hatchery/ nursery operators
a. This group specializes in rearing fingerlings and selling them to larger
operations and are usually small ponds 1-5 acres in size.57
b. Nurseries can also rear fish to larger sizes (up to 12 inches) which reduces the
production time by up to a third.
c. Very large pond owners integrate nurseries into their operations.
2. Feed manufacturers
a. Feed manufacturers buy a range of by-products from agricultural chains
including, oil seed cake (particularly groundnut), broken rice, rice bran from
millers, and waste from pulse mills / export sorters.
b. They also buy from the commodity exchanges and from larger millers of rice
and oil seeds, as well as from rejects from pulse exporters in Yangon.
c. Large pond owners integrate the capacity to manufacture their own blended feed.
57
MDRI/MSU, 2015

3. Rice and oil seed millers

a. Rice and oil seed millers provide major inputs for fish feed.
b. Many pond owners source directly from rice millers in close proximity to their
operations.
c. Oil cakes need to be transported from the Dry Zone, so are usually traded
through the commodity exchanges, although larger pond owners will source
directly.
4. Poultry farms
a. These livestock operations have greatly increased in recent years, particularly
in peri-urban areas.
b. Operators build ponds to utilize chicken waste as a food substrate, alongside
other feeds.

Annex 10 | Note on Value Chain Transaction Map Data

The figures presented in the value chain transaction maps are the output of a model based on
assumptions developed from primary data gathering and verified by secondary references. In
some cases, secondary data was used where clear answers were not provided during primary
data gathering. All the value chains are made up of a diverse range of actors at every level. The
information is intended to characterize each transaction type and estimate the average size and
frequency of transactions. Further study of specific behaviors of commercial actors is needed
to develop a more nuanced model. The model can be adjusted to enable new learning to be
added to enhance the accuracy of its outputs.


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Supporting Digital

Executive Summary ........................................................................................................... 4

Background and Context.................................................................................................... 8

Digital Financial Services Plus Readiness Framework ................................................... 12

Access to and Reach of Mobile Infrastructure ................................................................. 13

Adoption and Reach of Digital Finance Infrastructure .................................................... 16

Role of Government and Regulation ............................................................................... 25

Agriculture Sector Analysis and Value Chain Transaction Flows ................................. 28

Agriculture sector challenges and financial services needs ............................................ 38

Potential Applications of DFS ........................................................................................ 41

Assessment Objectives and Methodology ............................................................. 58

List of Stakeholders Consulted .............................................................................. 60

Summary of Rapid Value Chain Assessment ........................................................ 61

Locations of FGDs and KIIs .................................................................................. 63

Additional Details on Agriculture Sector in Myanmar ......................................... 64

Additional Details on the Rice Value Chain ......................................................... 68

Additional Details on Sesame Value Chain .......................................................... 72

Additional Details on the Pulses Value Chain....................................................... 77

Additional Details on the Aquaculture Value Chain ............................................. 82

Annex 10 Note on Value Chain Transaction Map Data ........................................................ 86

Supporting Digital Financial Services in Myanmar 1

Note on Exchange Rate and Interpreting Transaction Data

Supporting Digital Financial Services in Myanmar 2

List of Abbreviations and Acronyms

Asian Development Bank

Supporting Digital Financial Services in Myanmar 3

Supporting Digital Financial Services in Myanmar 4

1 | ACCESS TO AND REACH OF MOBILE INFRASTRUCTURE

OECD, Multi-dimensional Review of Myanmar, 2015.

Supporting Digital Financial Services in Myanmar 5

3 | ROLE OF GOVERNMENT AND REGULATION

Supporting Digital Financial Services in Myanmar 6

5 | AGRICULTURE SECTOR CHALLENGES AND FINANCIAL SERVICES NEEDS

Potential DFS Applications

Burma's Agriculture Sector

Transfers & Payments

Lack of Input Financing

- Expensive for FIs to serve

- Fertilizer and seeds

- Insecticides and sprays

Limited Footprint of Formal

Strong Liquidity Pressures

Lack of Asset Financing

- Farmers sell produce at low

- Antiquated farming methods

Infestations & Diseases

Expansion and development of

e.g. Weather index-based

Promote Development of a Robust DFS Ecosystem

- Human Centered Design

Development of indexes and

Supporting Digital Financial Services in Myanmar 7

B | Background and Context

Supporting Digital Financial Services in Myanmar 8

Payment flows and payment service providers in agriculture value chains

Rice: Delta (Ayeyarwady Region)

Supporting Digital Financial Services in Myanmar 9

Through an evaluation of the potential role of

Supporting Digital Financial Services in Myanmar 10

Supporting Digital Financial Services in Myanmar 11

C | Digital Financial Services Plus Readiness Framework

Agriculture Sector-Level Analysis